Slump prolongs crisis

Bloomberg

Home sales dropped 45.4 percent from a year earlier, the Auckland-based Real Estate Institute of New Zealand Inc. said yesterday.

The performance of manufacturing index fell to 35.4 last month from 43.3 in October, Bank of New Zealand. and Business New Zealand said in a separate report. The declines follow figures showing export volumes, retail spending and construction work dropped in the third quarter, indicating New Zealand’s economic slump has worsened amid the global credit freeze and contractions in the world’s biggest economies.

Reserve Bank of New Zealand Governor Alan Bollard has lowered interest rates by 3.25 percentage points since July to try to kick-start domestic demand. "The economy is entering the second stage of this protracted recession," said Stephen Toplis, BNZ’s head of research in Wellington. "Growth of our trading partners is falling rapidly. This has resulted in a sharp fall in commodity prices and slumping disposable income growth is leading to pressure on exports."

The $130 billion economy began shrinking in the first three months of 2008 amid a slump in housing.