Originally Posted by
Major von Tempsky
Another interesting one for the Left Whingers to digest.....
"The New Zealand economy is still a rock star, according to Paul Bloxham, the man who originally coined the phrase.
In a New Zealand economics comment, Mr Bloxham, the chief economist for HSBC Bank Australia, said despite lower dairy prices and lower growth in its major trading partners, New Zealand’s economy continued to be supported by a construction boom and the story had further to run.
As a result, interest rates were at high levels when compared with the rest of the developed world and the currency was high.
The New Zealand dollar was nearing parity against the Australian dollar for the first time in 42 years. Some early signs of domestic price pressures picking up suggested the New Zealand Reserve Bank was unlikely to cut rates this year, in contrast to current market pricing, he said.
Mr Bloxham said there were a range of indicators showing the New Zealand economy was still booming.
The broadest economic indicator of gross domestic product, or GDP, showed growth was broad based across industries with 15 of 16 sectors showing expansion over 2014. Overall GDP was running at a well above annual trend of 3.5%. The more timely indicators confirmed the strength had continued into 2015.
After moderating in the middle of last year, in response to last year’s 1% increase in the official cash rate, business and consumer sentiment had bounced back in recent months and were at levels implying continued above trend growth, he said.
Housing price growth had also picked up pace in the past six months, after easing back in response to the Reserve Bank’s actions.
”Given the ramp up in Auckland housing prices, the Reserve Bank looks set to expand its macroprudential tightening measures in June.”
The economy was largely being driven by domestic factors, Mr Bloxham said.
Somewhat perversely, the economy is driven by immigrants in the North Island and the post-earthquake boom in the South Island.
Tourism is strong.
And contrary to what Labour have been trying to scare the horses with, softer dairy and other primary industry returns aren’t getting in the way of GDP growth and general confidence. All our economic eggs are not in one basket.
For National, the only concern is if this can be sustained into 2017 when they need a strong economy for a fourth term. People vote with their back pockets, and economic stability will be a huge factor in retaining the blue vote.
– Dene Mackenzie, ODT