Treasury’s macroeconomic forecasters have had the unenviable task of having to publish three sets of macroeconomic forecasts within around seven months.
Two major sources of uncertainty during this period have been the timing of Christchurch rebuilding and the evolution of the debt crisis in Europe.
The following chart compares the forecasts for the annual growth in real GDP (production side) in the recently released Budget Policy Statement 2012 with the corresponding projections in the pre-election economic and fiscal update and in Budget 2011.
The projections tell a common story of slow recovery, a peak with the Christchurch rebuild, followed by a tailing off to of the order of 3 percent pa growth. The pre-election update forecasts stand out for being relatively bullish about growth in the first two years in the chart.
The marked difference between the forecasts at the start of this period (the blue columns) and those at the end (the green line) is that the peak growth rate has been pushed out for a year.
One can look at these projections and feel for the citizens of Christchurch – and for those in the construction sector who are no doubt trying to manage their capacity to participate in the Christchurch rebuild while avoiding major losses in the interim.