Feb 18 (Reuters)
New Zealand's recession has gone into a fifth quarter, but the government will limit new spending to keep deficits and borrowing contained, the finance minister said on Wednesday.
Bill English said the economy was performing closer to the "downside" scenario presented in the Treasury department's December forecasts following a further deterioration in the global outlook.
"We are now in our fifth quarter of economic contraction," he told a parliamentary committee in a scheduled appearance to discuss December's economic and fiscal update.
"The factor that has altered since (then)...is that our trading partners are headed into deeper recession than was forecast."
The recession, New Zealand's first in a decade, started in the first half of 2008 and most analysts expect it to continue at least through to the middle of 2009.
The Treasury's December forecasts showed no growth before mid-2010, budget deficits growing to 4.5 percent of GDP by 2011, and gross debt rising to more than 30 percent of GDP by 2011 from the current 19.5 percent.
English said the growth numbers of some major trading partners were looking "pretty awful", adding it was too early to say whether the global situation is bottoming out.
He reaffirmed the country's banking system was sound and supported by the central bank's various facilities and government guarantees. Continued...