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Where to now for NZ’s rock star economy?

Where to now for NZ’s rock star economy?

Growth in New Zealand, dubbed the ‘rock star’ economy in early 2014, has gone from a gallop to a canter as the year has gone on, but a number of factors continue to provide underlying strength, according to ANZ Senior Economist Sharon Zöllner.

"The New Zealand economy clearly is slowing, perhaps towards a growth rate of around 3 per cent, rather than 4 per cent."
Sharon Zöllner, Senior Economist at ANZ

Speaking exclusively to BlueNotes on video, Zöllner said a boom and bust cycle is always a risk for an economy the size of NZ, but at the moment, the country’s economy is heading for a soft landing. 

“The New Zealand economy clearly is slowing, perhaps towards a growth rate of around 3 per cent, rather than 4 per cent,” she said, noting that a rate of 4 per cent was always going to be hard to maintain. 

Zöllner said the NZ economy can probably grow at three per cent sustainably, whereas a year or two ago the speed limit was thought to be about 2 per cent. 

As a result of this, the Reserve Bank of New Zealand is likely to hold on until at least the end of this year before altering the current interest rate.    

“We think they’ll hike in the first half of next year," Zöllner said.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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