ASB predicts strong economic year

The Herald reports:

The New Zealand economy is set to move into high gear in 2017, according to ASB Bank.

The bank said this year was shaping up to be “full of promise” after a slow start in 2016. …

Strong population growth and low interest rates have fuelled construction demand and a tourism boom has the retail sector humming, she said in a commentary. The labour market has tightened and households now feel more confident.

Dairy prices have turned around after a two year slump, and analysts are already picking that Fonterra will lift its $6 per kg of milksolids farmgate milk price for this season. …

“All going well, 2017 should be a prosperous year for New Zealand. But, as always, being a small open economy which is subjected to the whim of global sentiment, we need to also prepare for the unexpected,” she said.

Consumer confidence has steadily improved over 2016.

“As we start a new year, household confidence is now well above average levels and points to stronger consumer spending growth.”

Turner said there were signs of healthy consumer confidence – from the busy mall car parks ahead of Christmas to the heavy holiday traffic.

Confident households were more likely to indulge at Christmas time and head away on holiday, rather than enjoy a “staycation”.

The tightening labour market had been a factor in contributing to a more confident consumer outlook.

“Furthermore, the recent recovery in dairy prices will deliver a wave of relief in dairy-intensive regions, meaning 2017 consumer spending growth should be fairly broad based across the country,” Turner said.

“Stronger domestic consumer spending should see NZ economic growth become relatively self-sustaining, and hopefully reasonably resilient to any global shock that could come our way.”

So long as Donald Trump doesn’t cause a global recession, we should be fine.