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

 

Fossils: Ancient Penguins Lived Alongside Dinosaurs?

Penguins are much older than previously thought and their evolution probably dates back to the days of the dinosaurs, according to research on the fossilised leg bone and toes of a giant ancient penguin found in rocks near Waipara, North Canterbury. More>>

No Voda/Sky: Commission Declines Clearance For Merger

The Commerce Commission has declined to grant clearance for the proposed merger of Sky Network Television and Vodafone New Zealand. More>>

ALSO:

EARLIER:

Power: IEA Report On New Zealand's Energy System

Outside of its largely low-carbon power sector, managing the economy’s energy intensity and greenhouse gas emissions while still remaining competitive and growing remains a challenge. More>>

ALSO:

NASA: Seven Earth-Size Planets Around A Single Star

NASA's Spitzer Space Telescope has revealed the first known system of seven Earth-size planets around a single star. Three of these planets are firmly located in the habitable zone, the area around the parent star where a rocky planet is most likely to have liquid water. More>>

ALSO:

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news