RTTNews - Monday, New Zealand's Treasury expects the economy to stay in recession until late 2009. The economy is forecast to contract in the first three quarters of this year on a sequential basis, with growth resuming in late 2009. Real GDP is expected to fall 0.9% in the March 2009 year and 1.7% the next year before staging a hesitant recovery.

The decline in consumer spending is set to continue in early 2009 due to falling house prices and rising unemployment. Even as GDP growth resumes, unemployment is forecast to increase further in the year ahead.

Further, the Treasury reported that global financial markets and forward-looking indicators of economic activity stabilized in recent months and the average forecast for trading partner growth in May was unchanged for the first time since early 2008.

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