The New Zealand economy is on track to reach 3 per cent
growth next year, according to ASB's latest quarterly
ASB chief economist Nick Tuffley said post-earthquake
rebuilding activity in Canterbury had been gaining traction,
apart from a few fits and starts.
Auckland was being buoyed by the housing market and was on
the cusp of its own house-building pick-up, he said.
Rural prospects were on a more solid footing following a
severe drought early in the year.
"Dairy incomes are set to rise over $4 billion this season.
Meat prices have also recovered from the drought-induced dip
earlier this year," Tuffley said.
"China's growing appetite for red meat, as well as dairy, is
an emerging positive to keep watch on," he said.
The large upswing in net migration inflows is an important
change for the economy over the past year.
In the year to August, the nation gained a net 12,848
migrants compared to the previous 12 months to August 2012,
when New Zealand lost a net 4118 migrants.
The main driver of the major turnaround in the nation's
migration flows is the movement of people between New Zealand
"Recently, unemployment has been falling in New Zealand but
rising in Australia, perhaps persuading more New Zealanders
to stay here, coupled with a large increase in the number of
New Zealand citizens deciding to return home," he said.
Canterbury is seeing a disproportionately sharp upswing in
migration, which would help feed its needs for workers to
support rebuilding activity there, he said.
The acceleration in the country's population growth is a
broader challenge for the housing market.
"Supply constraints in Auckland and Canterbury will continue
to push up house prices in those regions," he said.
"The long-term solutions involve making housing supply more
responsive, cheaper, and freer of unnecessary hurdles,"
The lift in migration inflows has also become an additional
factor for the Reserve Bank to consider when contending with
the overvalued housing market, along with low housing supply
and the impact of low interest rates stimulating borrowing
ASB expects the Reserve Bank to start raising its official
cash rate, in gradual steps, starting from March next year.
New Zealand's gross domestic product growth came to 2.7 per
cent in the June year. Statistics NZ's release for the
September quarter is due on December 19.