Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search


NZ economy forecast set to outpace most of OECD

8:12 pm on 31 May 2018

The New Zealand economy is set to grow at a faster pace than most of the countries in the 35-strong OECD, with activity shifting from consumption to investment.

In its biannual economic outlook, the OECD forecast economic growth of three percent in 2018 and 2019.

The country's economic growth was solid in 2017, underpinned by consumption and tourism.

The OECD - an intergovernmental organisation of developed countries - expected private consumption would slow due to lower immigration and an easing in the wealth gains from house price increases.

But demand in Auckland and the government-funded KiwiBuild programme would support residential investment, the outlook said.

Government spending on infrastructure would rise and business investment should recover after weakening at the end of last year due to capacity constraints, the organisation predicted.

Fiscal policy under the Labour-led government was expected to become expansionary, fuelled by the $5 billion families package, $2.6bn first year tertiary fees initiative and higher spending on health, education and homelessness.

The extra spending did not threaten fiscal stability, with government debt still declining as a share of GDP, the OECD said.

The organisation forecast government gross debt would fall to 35.7 percent and 35.6 percent of GDP in 2018 and 2019 respectively, from 36 percent in 2017.

The Reserve Bank was expected to lift interest rates next year to slow rising inflation pressures from capacity constraints and higher import prices.

Higher interest rates were projected to keep inflation near its two percent midpoint target.

The OECD said expected rises in interest rates and government spending would improve New Zealand's macroeconomic policy balance and both should also serve to reduce housing market pressures.

However, it warned the resolution of infrastructure and planning constraints in Auckland was critical to easing affordability challenges, boosting weak productivity and avoiding further house price hikes.

The biggest risk to the economy is a sharp downturn in the housing market as household debt was at record levels relative to income, the OECD said.

Conversely, the report said short-term growth could be higher if housing shortages in Auckland triggered further price rises and associated wealth effects.

© Scoop Media

Top Scoops Headlines


Joseph Cederwall: On Why the News Crisis Gives Us Hope

Scoop has exciting plans ahead for 2018 and beyond. The news media industry is coming to a critical juncture point. The increasing dominance of the digital platform monopoly giants and new developments such as Artificial Intelligence are contributing to disrupt the industry, render old ad-based models unviable and reshape the way we consume news. However, in all this crisis we see opportunity to create a new, more resilient and more decentralised future for independent news media... More>>


Scoop Turns 19: Once More Unto The Breach!

Alastair Thompson writes: While the fairer intellectual disciplines Science, the Arts and Academia continue to be generously funded by Government, philanthropists and billionaires alike, Journalism of the routine kind - which has for three centuries provided the information infrastructure upon which a pluralist democracy is based - is fast disappearing in a fog of fake news. So then, this is Scoop’s call to arms... More>>


Untruth-In-Packaging: Gordon Campbell On The Media’s Problem With The Trump Circus

After shredding America’s relationships with its traditional G-7 allies, US President Donald Trump is about to sit down to pursue a ‘no nukes for lifting economic sanctions’ deal with North Korea – ie the same trade-off that Barack Obama signed with Iran, and which Trump has just torn up More>>


Gordon Campbell: On Why We Should Be Anxious About Artificial Intelligence

Frankly, the prospect of possibly losing half the existing forms of paid employment to AI does make me feel extremely anxious, given the indifference shown by central government to the downstream social damage caused by the reform process last time around... More>>


Binoy Kampmark: Tom Wolfe The Parajournalist

As New Journalism’s primary advocate, Tom Wolfe headed the field with such experimental forces as Norman Mailer, Truman Capote and Hunter S. Thompson, all dedicated to enriching supposedly factual accounts with excessive flourishes that hurried out the beige in favour of the kaleidoscopic. More>>

  • PublicAddress
  • Pundit
  • Kiwiblog