New Zealand's economy is continuing to grow despite the global downturn.

Consumer spending is key to its success, Barry Hellberg of the New Zealand Retail Merchants' Association told the BBC's World Business Report.

Last month, the Treasury predicted growth of 3.1% in the year to 31 March 2002, falling to 1.9% the following year due to the effects of the global downturn.

Growth is then predicted to rise again to 3.7% in the year to March 2003 due to the expected recovery in the global outlook.

Sales turnover in 2001 is predicted to be 5% above the calendar year sales figures in the year 2000, according to Mr Hellberg, and he expects a similar increase in 2002 as well.

Steady growth

New Zealand experienced a boom in pre-Christmas spending with December sales through the eftpos system - an electronic payment system - up 6% on the previous year.

The terrorist attacks in New York did affect consumer spending in New Zealand but Mr Hellberg said the effect was short-lived with retail sales up 5% in September and 6% in October.

A low exchange rate has also boosted the competitiveness of the New Zealand farming sector internationally within the last 12 months.

"So given that higher returns are returning to the rural sector of New Zealand, that in turn has lead to a flow of benefits to the retail sector, particularly in provincial New Zealand," Mr Hellberg said.

The retail industry in New Zealand employs about 300,000 people representing about 17% of the total work force of New Zealand, according to Mr Hellberg

"To a certain extent the retailing sector here is the sleeping giant of the economy but it has been a reasonably good year for retailing in New Zealand," he added.