New Zealand

New Zealand - Economic forecast summary (November 2017)

 

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Economic growth should increase to over 3% in 2018-19, reflecting stronger investment and exports. Capacity constraints, high profitability, low financing costs, housing shortages and government demand should support investment, while agricultural exports should recover following adverse weather and temporary price weakness. Inflation is projected to rise to 2.4% by late 2019.

Fiscal policy is to become expansionary in 2018-19, reflecting both measures retained from the May 2017 budget and the new government’s plans to increase government consumption, investment and transfer payments. Although monetary tightening is projected to begin in late 2018, policy will remain highly accommodative.

House prices and household debt have soared in recent years to high levels in relation to incomes. Households are highly exposed to interest rate risk. Macro-prudential regulation should be tightened if there is a resurgence of debt-fuelled house price inflation. A maximum debt-to-income ratio should be considered if expected benefits exceed costs.

 

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Other information

Economic Survey of New Zealand (survey page)

 

 

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