WHILST neighbour Australia continues to struggle with a bloated housing market and declining currency, leading international banking authority HSBC have outlined New Zealand for a meteoric rise to the top of the economic charts.
Paul Bloxham, chief economist for Australia and New Zealand at HSBC stated that “We think New Zealand will be the rock star economy of 2014. Growth is going to pick up pretty solidly this year,” and cited a number of fundamental reasons for economic optimism. With an anticipated 3.4% growth during 2014, New Zealand’s economy will expand at a rate well above the 2.5% predicted as the current average for other economic powers.
Three Reasons for Optimism
Investors and analysts are particularly confident with these predictions due mainly to the fact that they are not based on one single factor, providing a solid basis for continued growth. Firstly, after the tragic scenes of the 2011 earthquake in Christchurch, the construction industry looks set for a huge boost as regeneration begins in earnest. Expected to peak in 2017, huge amounts of money are expected to be spent in the coming years, creating an economic boom within the construction industry.
Secondly, as the country’s housing market continues to grow – supported by low interest rates and a recent wave of immigration – so too will this burgeoning economy. It is expected that interest rates will rise in the coming year, however, both residential and commercial investment is predicted to continue as demand continues to rise.
Rising dairy prices throughout the world, particularly within China, is cited as the third reason the New Zealand economy is set for stardom. With around a third of all dairy trade coming out of New Zealand, and with demand continuing to rise in emerging markets, it is easy to see why economists are predicting such growth.
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