3 Apr 2014

Listen to Lagarde, says leading economist

3:04 pm on 3 April 2014

One of the country's leading economists says New Zealand should heed warnings that the global economy could be heading for years of weak growth.

Christine Lagarde: a critical juncture.

Christine Lagarde: a critical juncture. Photo: AFP

The head of the International Monetary Fund, Christine Lagarde says the world is emerging from the greatest financial crisis in almost 100 years and is at a critical juncture.

She says the global growth forecast of 3 percent this year and next is below par, and the world could fall into a medium-term low-growth track.

While many developed countries continue to struggle, New Zealand's economy is set to grow about 3.5 percent this year, due in part to strong demand from China.

Many analysts say New Zealand is well-placed to take advantage of China as it becomes richer and demands more dairy and meat products. But the principal economist at the Institute of Economic Research, Shamubeel Eaqub, says China's future is itself reliant on a strong global economy.

"If the global economy continues to be slow," he says, "China cannot carry the burden of global growth on its own forever - and that is a risk for New Zealand."

Mr Eaqub says the rebuilding of Christchurch and rising immigration will be important drivers of growth in the next couple of years, but they will eventually end.