Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


ASB Quarterly Economic Forecasts

ASB Quarterly Economic Forecasts July 2013

EMBARGOED UNTIL 5am Wednesday 24 July 2013

Economy making gains, but with house price pains

New Zealand’s economic recovery appears to be broadening, though drought is still causing hurt this year.

Domestic developments have the RBNZ in a bind.

Some events seem to be going New Zealand’s way with the economy making steady progress as it recovers from the deep recession during 2008 and 2009, according to ASB’s latest Quarterly Economic Forecasts.

ASB Chief Economist Nick Tuffley says, “Momentum is becoming more evident across a broader range of economic activity, which is a pleasing development. The lower NZ dollar across several currencies will be providing some relief for a number of exporters, and strong dairy prices have enabled Fonterra to forecast a robust milk payout for the new season in the wake of the drought.”

Mr Tuffley is particularly encouraged by the domestic outlook, “The rebuild of Canterbury continues to gather momentum. Recovery in the region is spreading beyond construction to other activity, such as employment and retail spending.”

Nevertheless, Mr Tuffley warns New Zealand still faces some challenges. “That’s because the global environment still has potholes.” Mr Tuffley points to the increase in political instability in Europe, and the increased uncertainty around Australia’s and China’s outlooks. These developments have been broadly offset by encouraging economic signs in the US and Japan.

In addition, strong house price growth in Auckland and Canterbury is causing the RBNZ concerns that any future pullback in prices could impact the financial system and broader economy.

Mr Tuffley says, “Domestic developments have the RBNZ in a bind: higher interest rates are the most effective way to curb rising house prices, but the inflation outlook doesn’t warrant higher interest rates just yet.” Mr Tuffley sees a strong possibility the RBNZ will impose restrictions on new mortgage lending with high loan-to-value ratios. However, Mr Tuffley points out, “Such limits risk placing the burden of dealing with overheating house prices on first-home buyers, arguably the most deserving of prospective home buyers.”

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: SkyCity Lifts Minimum Convention Centre Investment To $430M

SkyCity Entertainment Group, the casino operator, has lifted the minimum it will invest in the Auckland International Convention Centre to $430 million and said total costs including land may be $450 million to $470 million. More>>

Statistics: Drop In Dairy Prices Leads Fall In Exports

Total goods exports fell $240 million (5.5 percent) to $4.2 billion in April 2015 compared with April 2014, Statistics New Zealand said today. More>>

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>


Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>

BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news