New Zealand faces conditions that are eerily similar to those which preceded the 1998 recession, the Bank of New Zealand says.
The bank is forecasting a slowdown, but not a recession, this year but it says the risks to the economic outlook are “massive”.
“On top of a worsening global backdrop and a weaker-than-expected local housing market, we are potentially also facing a repeat of the 1998 drought – with a dose of the 1992 power crisis thrown in for good measure,” BNZ economist Mark Walton said.
As in 1997, after a period of sustained economic expansion, household balance sheets are stretched, the housing market is softening rapidly and consumer confidence is in decline.
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