By Political Editor Duncan Garner
Finance Minister Bill English has returned form talks in Washington bearing a grim message; the mood there is gloomy and another recession could be on the way.
He also accepts that the aggressive growth forecast in the Government’s May budget is likely to be revised downwards.
“Some of the people [in Washington] are worried that the problems there won’t be dealt with and if they are not then we’re looking at another significant recession,” Mr English said.
All of this affects New Zealand; we sell most of our goods to China, Australia and the US. If they slow down, they buy less, we suffer.
“The world is going to be a tougher place to do business, not easier,” Mr English said.
The Finance Minister’s May budget predicted 4 percent growth in 2013. He says that is now unlikely.
“I would expect with the negative mood, especially in the US, and Europe and China slowing a bit, I expect to see those forecasts come back for the next two or three years.”
That growth meant 170,000 new jobs. Btu with growth figures expected to be revised downwards, the Greens say that figure is meaningless.
“The Government’s forecasts are falling apart because the global economy is in trouble,” says Green Party co-leader Russell Norman.
Prime Minister John Key had predicted an “aggressive recovery” but he no longer uses that language.
“I’d say it is going to be a moderate recovery with continued drop in unemployment and interest rates staying low,” says Mr English.
“This is a Government sleepwalking and hoping jobs come their way, but it doesn’t work like that,” says Mr Norman.
The economy is now the central election issue and Mr Key is hoping voters trust him to run it.
His disposition is certainly sunny and hopeful, but Mr English appears to be more realistic and cautious.
With so many external issues now threatening to slow the economy, Mr Key will have to work harder to convince voters that his plan of a “brighter future” is working.
3 News