HSBC Global Research
New Zealand in 2014: Firing on all cylinders
Growth is picking up pace in New Zealand and we expect the trend to continue through 2014
- Post-earthquake reconstruction, a local housing boom and high export prices should support broad-based economic growth
- We expect NZ dollar strength, underpinned by the healthy domestic economy, to remain a headwind for trade-exposed
sectors
After a number of years in the doldrums, we expect New Zealand’s growth to pick up strongly in 2014. Our forecasts for
the coming year suggest that New Zealand is likely to outperform almost all other OECD economies (the exceptions are
Chile, Israel and Mexico).
Growth is expected to be supported by three key factors. First, a substantial post-earthquake reconstruction effort in
the Canterbury region, following the earthquakes in 2010 and 2011. Rebuilding has already begun and is expected to run
for a number of years yet. Second, a local housing boom, which is already underway and expected to continue. This boom
has been fuelled by a combination of low interest rates and weak supply of housing, due to under-investment in recent
years. Third, dairy export prices have ramped up substantially in recent years as a result of strong Asian demand. This
is lifting rural incomes. Overall, annual GDP growth is expected to pick up to 3.4% in 2014 from 2.8% in 2013.
ENDS