Experts point to downward correction of New Zealand's growing economy

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1 NEWS

Domestic and international pressures mean our currently high growth rate – around three per cent - can't continue forever, economists have warned.

All eyes are on the economy ahead of the budget release this week.
Source: 1 NEWS

Local business owner Michael Vickers, who owns North Shore Demolition, noticed a slowdown six months ago.

Mr Vickers says while the demand to demolish buildings have gone down, the sale of recycled items has kept his company in business.

"We’re just back on the yard. The yard sales will get us through - they got us through last time," Mr Vickers said.

"There's a fuel tax coming up and that's going to affect business, especially trucking companies and we run a lot of trucks."

John Ballingall, the deputy chief executive for the New Zealand Institute of Economic Research, says business confidence has fallen sharply after the change in government six months ago.

"On the domestic front, business confidence has fallen sharply since the change in government and firms are telling us that they plan to invest and hire less than they have before," Mr Ballingall said.

"We've spoken very vocally around high levels of household debt and particularly concentrated levels of household debt around property investors," Adrian Orr, the Reserve Bank governor, said.

There's been concern about a possible trade war between the United States and China.

"There’s a lot of uncertainty out there about what the global trading environment looks like and that's bad news for a trading economy such as New Zealand," Mr Ballingall said.

The economy moves in cycles, but a financial crisis at the level of 2008 is being downplayed.

Cameron Bagrie, former ANZ chief economist and owner of Bagrie Economics, says, "If you believe in statistics, years ending in eight tend to be a bad year."

"There's some warning signs around the globe but there's also some pretty good signs - the world's largest economy has got an unemployment rate of 3.9 per cent. That's a sign of economic strength - that kind of stuff is to be embraced," Mr Bagrie said.

Michael Vickers believes future-proofing the economy starts at the grass roots.

"Apprenticeships - I’d hit apprenticeships hard. Training - we've got plenty of it and lawyers - let's get some truck drivers," he said.

This week will reveal whether the government is listening.

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