NZ economy – gaining traction

The BusinessNZ Planning Forecast indicates that the New Zealand economy is gaining traction.

Export prices remain high, and economic growth is forecast to average just over 3 percent per annum out to March 2015.

Improved business and consumer confidence and continued solid growth prospects for China, New Zealand’s largest export customer, are among the positive indicators in this quarter, says BusinessNZ economist John Pask.  However, growth prospects for Australia, New Zealand’s second largest export customer, are muted.

One concern in the domestic economy is increasing household debt levels.

“Debt is increasing at a time when servicing costs are relatively low and interest rates are at historic lows.  There is a danger that when interest rates rise again, households may get into strife if the economy falters,” Mr Pask said.

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 19 for the June quarter, up 9 on the previous quarter and up 27 on a year ago.

The BusinessNZ Planning Forecast for the June 2013 quarter is on www.businessnz.org.nz