New Zealand’s economy likely to outperform in 2017, says HSBC

The New Zealand economy has seen impressive growth over the past year. Real GDP rose by 0.8-0.9 percent q/q over the past four quarters. RBNZ's expansionary monetary policy, immigration and high construction activity have boosted growth.

Construction activity is set to continue to grow, driven by housing and infrastructure, although capacity constraints are starting to appear. The tourism sector continues to boom, driven by rising visitor numbers, particularly from Australia, China and the US. Concerns about the low milk price have eased. Dairy prices have rebounded and should boost rural incomes.

New Zealanders have become increasingly optimistic about the state of the labour market. This has been underpinned by increases in the number of job openings as economic activity has strengthened. There are signs that domestic price pressures are gradually building, which is expected to pave the way for higher interest rates.

“We have been optimistic about New Zealand’s economy for quite some time now, and we remain so. Growing ties to Asia, underlying flexibility and a positive reform agenda have all worked in New Zealand’s favour.” said HSBC in a report.