The New Zealand economy is recovering from one of the deepest and longest recessions in living memory. The recovery over the past three years has been grudgingly slow.
But reviving credit growth, housing investment and the accelerating Canterbury rebuild suggest 2013 and 2014 will be better than the past four years – good news for the transport and equipment supply industries, in particular.
This is the view of the NZ Institute of Economic Research’s principal economist, Shamubeel Eaqub.
“We expect economic growth of 2%-2.5% over the next few years.” says Eaqub. “This is an improvement from the less than 2% growth per year over the past three years, but slow compared to past recoveries.
“The recovery is brittle, however. Household debt in New Zealand is still high and the rest of the world is not yet out of the woods.
“The RBNZ will keep interest rates low, but reviving house prices and borrowing will force its hand to higher interest rates and perhaps new macro-prudential measures to curb borrowing from early 2014.
“A strengthening recovery will provide much needed relief. For households it means more jobs and rising incomes. Businesses will enjoy more sales and greater profit margins. The government will also enjoy a larger tax take,” says Eaqub.
