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NZ economy – on course but some risks

NZ economy – on course but some risks

The BusinessNZ Planning Forecast shows the New Zealand economy is set to achieve around 3.5 percent growth in the short term – one of the highest growth rates in the OECD.

Forecast indicators, such as the BNZ-BusinessNZ PMI and PSI show respectable economic growth that is spreading through many sectors, and the agricultural and construction sectors are showing strong growth, despite recent falls in dairy prices.

But BusinessNZ Chief Executive Phil O’Reilly says there are risks that must be acknowledged.

“A predominance of trade with China and Australia, the impact of interest rate rises, high household and farm debt, and regulatory uncertainty in the run-up to the September election are some of the risk factors for the economy.

“Strong net migration inflows – currently nearly 40,000 per year – will add to inflationary pressures, particularly for housing in Auckland.”

The BusinessNZ Planning Forecast incorporates BusinessNZ’s Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures.

The ECI sits at 10 for the June 2014 quarter, down 1 on the previous quarter and down 3 on a year ago.

The BusinessNZ Planning Forecast for the June 2014 quarter is on www.businessnz.org.nz

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