Omens of recession seen in economy

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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