(RTTNews) - New Zealand’s economy is expected to grow at an annual rate of around 2% over the second half of 2009, the Treasury said in a report Monday.

According to the report, the recovery in New Zealand growth appears to have strengthened over the September quarter and continued in October. However, the treasury warned that significant challenges remain, which will likely restrain the extent of the recovery over the medium term.

New Zealand’s economy posted a growth of 0.1% in the three months to June following contractions in past five quarters. The economy shrank 1.8% for the year ended June 2009.

Moreover, the treasury said annual inflation is expected to rise in the December quarter before trending lower over 2010. In the September quarter, inflation rate fell to 1.7% from 1.9% recorded in the June quarter.

The Reserve Bank of New Zealand left its official cash rate unchanged at 2.5% on October 29. Recently, the nation’s biggest fund manager, AMP Capital Investors, said New Zealand’s central bank may need to raise its official cash rate in March to curb rising inflationary pressure. According to the treasury, the central bank’s October review confirmed that the OCR was likely to remain at the current level until the second half of 2010.

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Posted in Categories: Economy, New Zealand, Releases.

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