Thursday, New Zealand's Prime Minister John Key said the economy is not expected to grow in 2009 as weak global demand hit exports. He noted that unemployment is likely to increase sharply in the coming days as companies cut jobs to survive in the adverse economic conditions.
After meeting senior government ministers and officials in Wellington to discuss the economic conditions, Key said the outlook for the economy continued to worsen since the Treasury revealed its latest forecasts in December.
"New Zealand is facing challenging economic times as the global economic crisis washes over us, " Key said.
Key called a "Summit on Employment" chaired by NZX chief executive officer Mark Weldon to discuss major challenges the country is going to face this and how to retain and grow jobs. The summit is to be held on February 27 in Auckland.
"The National-led Government is implementing its economic plan, and we will see more initiatives in coming months," Key said in a statement.
"The summit will bring together business, union and other leaders in the community to address a vital part of a healthy economy - employment."
Key said, "I am determined that this won't be a talk-fest. I want to see outcomes from the summit that we can move to examine and implement."
In December, the Treasury had said in its monthly economic report that the labor market continued to weaken in the September quarter and the unemployment rate rose to 4.2%, its highest level since the December 2003 quarter.
According to Treasury's half-yearly economic forecast, real GDP is forecast to grow 0.3% in the March 2009 year. Growth is expected to remain weak over the 2010 March year at 0.8%, down from 1.8% in the Pre-election update. Real GDP growth is expected to rise to around 3% in 2011 and just below 4% in 2012 and 2013.
New Zealand's gross domestic product declined 0.4% in the September 2008 quarter after falling 0.2% in the June 2008 quarter and 0.3% in March 2008 quarter.
Elsewhere on Thursday, two separate reports showed house prices in New Zealand declined in December. Property information company, Quotable Value or QV said house prices fell 7.4% year-on-year in December. The Real Estate Institute of New Zealand or REINZ said the national median house prices declined 4.78% year-on-year to N$328,500 in December.
QV said in its monthly residential price movement report that 2008 has been a pivotal year for the NZ property market with a sustained drop in property values for the first time since 1998.
Mark Dow of QV Valuations said, "Property values held reasonably flat through the first three months of the year, but the decline kicked in through the autumn and winter months, during which time values dropped 6%. With the significant drops in interest rates over the past three months, there has been an increase in market activity and values appear to be flattening again."
Dow added that after a period of sustained growth, a correction is inevitable. "The question remains how long this period of falling property values will continue," it said. The average New Zealand sale price for December increased slightly to NZ$378,605. The report showed all the main centers showed further declines in property values.
REINZ said the value of total residential sales nationwide in December was NZ$ 1,705,409,595. REINZ president, Mike Elford noted that the downturn of the past few months is, in part, evidence of a "correction" of what in some areas were wrongly inflated values.
The number of homes sold nationwide in December was 4,302, slightly up on November sales of 4,279 but down from 5,597 recorded in the previous year.
Elford said, "The forthcoming Government Economic Summit will be looking at ways of encouraging positivity in the economy and housing is always a good way to get things going." He noted that lower interest rates and tax cuts will increase people's confidence.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.