Treasury has indicated in its September economic update that it was possible the recession in GDP would continue in the September quarter before tax cuts, a lower NZ dollar and the end of the drought combined to increase GDP in the December quarter.
"We maintain our view that the economy contracted in the June quarter, as stated in the July 2008 Monthly Economic Indicators," Treasury said.
"At this stage we are not ruling out the possibility of a further small fall in the September quarter with residential investment expected to post a significant contraction in the September quarter," it said.
"We continue to expect growth to turn positive in the December quarter owing to the combined effects of tax cuts, recovery from the drought and the weakening NZ dollar," it said.
"We also expect annual average growth in real GDP to be around 0.5% in the calendar 2008 year."
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