NZ economy likely growing again, rebound fragile: PM

“We may be out of the worst of the recession and starting to move into a growth phase,” he said.

Key said he believed the economy would expand in the three months to the end of September, and that growth would accelerate after that as the world recovers from the financial crisis.

But the rebound is fragile and “we are not completely out of the woods yet,” said Key, a former international currency trader.

One sign of recovery was a 55 percent increase in prices for dairy products in the past two months. Dairy exports are the country's biggest foreign currency earner, after tourism.

The Treasury Department said in a commentary released Monday that a small decline in gross domestic product in the April-June quarter is likely to represent the last quarter of contraction in the current recession which dates to early 2008.

The department said it expected unemployment would continue rising till mid-2010, likely reaching around 7.5 percent — lower than the 8 percent peak it forecast in the annual budget in May.

Retail sales increased 1.1 percent in the June quarter, the first quarterly increase for a year, Treasury said.

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