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

 


Quarterly Forecast: The maturing of a “rock star” economy

Media release

ASB Quarterly Economic Forecasts July 2014

EMBARGOED UNTIL 5am Tuesday July 29 2014

The maturing of a “rock star” economy

NZ economy maintains good momentum in 2014.

But signs emerge that growth will moderate to a more sustainable pace next year.

High NZD remains a dilemma for the RBNZ as it continues on its tightening path.

Growing divergence between global commodity export prices and the NZD poses on-going dilemma for the Reserve Bank.

Momentum continues in the New Zealand economy in 2014, according to the latest ASB Quarterly Economic Forecasts. But signs have emerged that growth will moderate to a more sustainable pace over 2015.

ASB Chief Economist Nick Tuffley says New Zealand’s economic growth is running above trend, led by a surge in construction activity.

“We are seeing this construction growth flow through to stronger demand across a broad range of sectors,” Mr Tuffley says.

However, there are signs the New Zealand economy is beginning to respond to higher interest rates.

“The easing in business and consumer confidence more recently point to a moderation in growth next year.” Mr Tuffley says. “This will see New Zealand economic growth moderate to a more sustainable pace.”

The ongoing decline in global commodity export prices, particularly for dairy, has softened the tone of recent developments. But despite these commodity price declines, the NZ dollar remains high.

“The growing divergence between global commodity export prices and the NZD poses a continued dilemma for the RBNZ,” Mr Tuffley says.

Yield demand for the NZD remains strong in the low foreign exchange volatility environment.

“The NZD strength is exacerbated by the RBNZ’s continued path to raising interest rates. This is in stark contrast to the loose monetary policy still undertaken by many central banks,” Mr Tuffley says.

“We expect the NZD will soften, but not materially until next year when other major central banks look to return monetary policy to more normal settings. For now, continued NZD strength is one factor likely to keep the RBNZ on hold until late in the year.”

ASB economists expect the OCR will peak at 4.5% in the second half of next year.

“Housing market activity has already started to moderate, and we expect further moderation over the next couple of years as the higher interest rates and new housing supply restrain housing demand,” Mr Tuffley says.


ENDS


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Dollar Catches Breath After "Goldilocks" Slump

The New Zealand dollar edged up following its dramatic slump yesterday after the Reserve Bank confirmed speculation it intervened in the currency market last month and PM John Key suggested a “Goldilocks” level far lower than at present. More>>

ALSO:

Biosecurity: Kiwifruit Claim To Hold Officials Accountable For Psa

Kiwifruit growers have joined forces to hold Biosecurity NZ accountable in the courts for its negligence in allowing 2010’s Psa outbreak that devastated New Zealand’s kiwifruit industry and exports. Foundation claimants representing well ... More>>

ALSO:

Poison: Anglers Advised Not To Eat Trout In 1080 Areas

With the fishing season opening in just a few days (1 October 2014), anglers are being warned by the Department of Conservation(DOC) not to eat trout from pristine backcountry waters and their downstream catchments, where the department is conducting 1080 poisoning operations. More>>.

ALSO:

Quotas: MPI Swoop On Suspected Fraudulent Fishing Activity

Ministry for Primary Industries (MPI) compliance officers swooped on a Hawkes Bay fishing enterprise today to secure evidence in an investigation into suspected fraudulent activity... “The investigation involves activity throughout the commercial supply chain – catching, landing, processing and exporting.” More>>

ALSO:

Scoop Business: Fonterra Slashes 2015 Milk Payout, Earnings Tumble 76%

Fonterra Cooperative Group cut its forecast 2015 milk price payout by about 12 percent, citing weaker global dairy prices and said there is a risk of further declines given strong global milk production. More>>

ALSO:

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news