Wellington, July 24 NZPA - Fund manager AMP Capital today declared closure on a recession in New Zealand that ended up being "run of the mill".

Investors must now consider if the recovery will be "V" shaped or "W" shaped, with a double dip.

The key risks are dairy prices and the impact on the export sector of an earlier than usual recovery in the NZ dollar, according to Jason Wong, head of investment strategy at AMP Capital.

The reports of the current economic downturn being the worst since the Great Depression or World War 2 may be the case for other economies, but New Zealand had experienced a pretty mild recession, he said.

"In New Zealand's case it is not really comparable with anything like the Great Depression. It's been a run of the mill, probably mid-range economic recession," he said.

New Zealand had come out of the global turmoil well because it did not have the banking system concerns of other countries among other factors.

The New Zealand economy was going to recover in line with the global economy.

Typically a cheap NZ dollar helped the New Zealand economy climb out of recession.

"But in this cycle there is a concern about the potential of exports to drive us out of recovery."

The real question was the sustainability of the recovery.

"Our view is the best part of the recovery is going to be over the next six months or so when you are climbing out of a very low level. In the medium term there are global headwinds," Mr Wong said.

AMP Capital has $1 billion under management in New Zealand equities and $10.8 billion under management across a range of asset classes. It is currently 5 percent to 6 percent overweight in global shares.

AMP Capital saw risks in the bond market in the medium term and did not expect great returns from cash in the short term.

It thought a shortage of supply will support the commercial property market, particularly in Wellington, and that the residential property market is in a bottoming out phase.

It is confident about equities in the short term.

"We are not saying it is a bull market," Mr Wong said.

"This recovery in equity markets, we think, is a genuine bounce from its low levels."

But closer to the end of this year it will be harder to be optimistic about equity values.

For the quarter to June 30, AMP Capital's conservative diversified fund returned 1.4 percent and for the year it returned 5.1 percent.

The balanced diversified fund returned 4.7 percent for the quarter and negative 6.9 percent for the year and the growth diversified fund returned 7.3 percent for the quarter and negative 18.8 percent for the year.

Individual asset classes had varying performances. Global property returned 31.6 percent for the quarter but negative 43 percent for the year, and hedged global equities returned 20.2 percent for the quarter and minus 41.7 percent for the year.

Global fixed interest had a minus 0.6 percent quarter return and a 9.2 percent return for the year. New Zealand fixed interest had a 1 percent return for the quarter and a 15.8 percent annual return.

New Zealand equities returned 8 percent for the quarter and minus 6.4 percent for the year, and cash returned 1 percent for the quarter and 7 percent for the year.

New Zealand property produced negative returns at minus 9.9 percent for the quarter and minus 21.2 percent for the year.

NZPA