The outlook for the New Zealand economy has declined in recent months, and credit reporting company Dun & Bradstreet (D&) says the worst is yet to come amid collapsing world trade.
New Zealand economic growth was forecast at -1 percent this year, while world economic growth was expected to slow to -1.2 percent, slightly worse than D&B's forecast in January, the company said in its Economic and Risk Outlook.
Declining world trade, particularly in the Asia-Pacific, and a sharp drop in economic growth for China had significantly heightened the downside risk to New Zealand's outlook, D&B New Zealand general manager John Scott said.
In particular, growth in China and Japan is forecast to slow to 3.5 percent and -3.8 percent respectively this year.
Increasingly protectionist governments and policies aimed at shoring up domestic banks, which may result in restricted international capital flows, posed big risks to the world economy in coming months, Mr Scott said.
Already, 70 countries out of the 132 rated by D&B had had their risk rating downgraded over the last six months, and further country downgrades were likely.
"The mass country risk downgrades, slump in world trade and forecast decline in growth for many of our key trading partners all point to a deteriorating outlook," he said.
"This requires a unique balancing act from the New Zealand government. They need to stimulate the New Zealand economy but do so in a way that avoids contributing to protectionist trends, both manufacturing and financial, around the world."
New Zealand's risk rating was DB2c, indicating low risk and a low degree of uncertainty in doing business with the country, but its risk profile was deteriorating.
The ratings ranged from DB1a through to DB7.
The rating covered not just the economy but also the political outlook. Slowing economies were expected to fuel growing social unrest in coming months.
NZPA