Bloxham on NZ Economy

HSBC Chief Economist was on Q+A on Sunday. Some extracts:

Well, we think it’s going to stick around for a while, yeah, because the New Zealand ’s doing very well. In fact, we’ve been describing the New Zealand for quite some time now as a bit of a rock star. It’s been outperforming almost all of the developed world over the past 18 months or so.


It’s a reflection of the fact that New Zealand is outperforming every other OECD economy over the recent period. And as I say, that’s why we’ve been describing New Zealand as a rock star. It was the fastest growing economy of the 34 OECD economies in the last year. And we think that situation’s going to continue this year as well.

And the downsides of the high dollar:

High currencies obviously have strong positive effects and they have negative effects as well. The negative effect, of course, is it does make your exporting industries a bit less competitive. It’s going to put some pressure on exporting manufacturers. What’s interesting at the moment, though, is that if you look at the data, actually, most of the exporters are still doing fairly well. Most of the industries are still doing fairly well. In fact, over the last year if you look at GDP, which is the broadest metric of activity in the economy, 15 of 16 industries all saw an expansion over the past year.

So not just construction.

At the moment, inflation is very low, and, in fact, you can think of the RBNZ being in a plum position, that is growth is strong, it’s running above trend, the unemployment rate is trending lower, but inflation is exceptionally low. It’s below the bottom edge of the RBNZ’s target band.

High growth, low inflation, falling unemployment – a very good combination. It won’t last forever, but it is good while it does.


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