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30-03-2015

NZ economy -balancing risks

Risks and opportunities for the New Zealand economy are finely balanced, according to the latest BusinessNZ Planning Forecast.

BusinessNZ Chief Executive Phil O'Reilly says there is positive growth in the construction, manufacturing and services sectors; employment growth and investment intentions remain strong; and inflation is well under control.

But he said the latest results for global dairy prices gave cause for some concern.

"Global dairy prices have recovered some of the ground lost over the last few months, but a recent substantial dip in prices could conceivably lead to a cut in Fonterra's forecast payout."

He said while strong inward migration was sparking demand in the economy, it could also bring inflationary pressures, especially in the Auckland housing market.

"Given such pressures, the Reserve Bank is likely to continue with its loan to value ratio regime for some time."

The BusinessNZ Planning Forecast incorporates BusinessNZ's Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures.

The ECI sits at 17 for the March 2015 quarter, up 5 on the previous quarter and up 9 on a year ago.

Download the BusinessNZ Planning Forecast for the March 2015 quarter.

Tags: economy watch

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