NZ At A Glance

New Zealand At A Glance

Doug Steel -

Economic growth is expected to remain near potential, having slowed from an above-trend pace over recent years. Supply issues such as physical capacity constraints, infrastructure bottlenecks, a low unemployment rate, and declining working age population growth are material factors acting against faster expansion. Associated cost pressures coupled with high energy prices and a falling NZD sees business margins under pressure. This, and some concern around government policy, has resulted in weak business confidence. It is a risk to investment. Meanwhile, rising costs are driving some upward pressure on inflation, although the RBNZ seems in no hurry to move interest rates in either direction. A possible El Nino weather pattern over coming months is a risk to pastoral agriculture and the type and cost of electricity generation.