New Zealand is teetering on the brink of recession, the Bank of New Zealand said on Monday.
The bank said there is a better than even chance of a consumer-led recession in the second half of the year, Radio New Zealand reported.
A recession is defined as two quarters of economic contraction.
BNZ head of market research Stephen Toplis said the consumer sector generates two-thirds of economic activity, but is being battered by a number of factors, including the housing slump, rising mortgage rates, higher bills and international developments.
BNZ's warning has taken on added significance since the United States' fifth-biggest investment bank, Bear Stearns, sought emergency funding on Friday, raising fears about its survival.
He said the Reserve Bank can cut interest rates, but the rising cost of funding may result in banks continuing to push up the cost of borrowing to households and businesses.
The stock exchange said New Zealand needs to prepare for any fallout from a worldwide recession.
Source:Xinhua
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