Ryan Anderson / Stuff
The country’s biggest bank is counting on more people crossing the border to avoid a recession.
ANZ predicts the economy will contract in the first half of next year and could easily slide into recession if overseas tourists and international students are slow to return.
The bank’s updated economic forecast, released on Tuesday, sees the country avoiding a recession, but ANZ warned that this assumed a strong recovery in the country’s export sector.
ANZ now thinks house prices will fall further than it previously thought, predicting a 15% drop in prices from “peak to trough” rather than a 12% fall.
It also cut its net migration forecast, predicting that the country will not see a return to a net influx of migrants until the middle of next year, instead of the end of this year.
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Immigration would recover to a lower level, peaking at a net annual influx of 12,000 people, instead of 25,000, it also predicts.
“In a nutshell, arrivals of non-New Zealand citizens are not yet expected to close the gap of departures of New Zealand citizens,” he said.
“The Australian job market is too hot and pays better.”
ANZ, unlike some banks, expects stronger wage growth to prompt the Reserve Bank to raise the benchmark rate to 4% in November.
Many other analysts are tipping the rate to peak at 3.5%.
Economic uncertainty and rising interest rates would lead to a decline in business investment, he predicted.