The pace of growth expected over the next few years was consistent with only a gradual reduction in the country's spare capacity.
''So while inflation looks to be past its lows, the Reserve Bank is under no pressure to raise rates to head off the risk of an overshoot in inflation.''
Releasing the Westpac Economic Overview yesterday, Mr Gordon said the economy was set to continue growing at about 3% a year for the next couple of years, although the drivers of growth were changing.
Softening housing market activity would dampen household spending. But, at the same time, there was a lift in investment, including increases in home building and infrastructure spending, as well as a recovery in the rural regions.
At a regional level, most regions had shared in the country's economic upturn in the last two or so years, but there had been a notable under-performance among the more dairy-intensive regions.
With farm-gate milk prices back to near average levels, a more even growth performance was expected across the regions in coming years, he said.
Building activity was heating up across much of the country, especially in the North Island. House price gains, and their associated effects on household spending, had spread well beyond Auckland.
Tourist spending was up across the board. Most regions were experiencing stronger population growth, courtesy of fewer New Zealanders heading overseas.
There had been some notable distinctions across the regions, perhaps most apparent in the jobs market, Mr Gordon said.
The Household Labour Force Survey told some of the tale, but sampling error was a significant issue for the survey.
As a complement to the official labour force statistics, Westpac had examined the share of the working age population who were receiving the jobseekers' benefit.
''This is only part of the picture, as there are many people who are looking for work but do not receive this benefit. But it is a complete picture rather than a sample. It provides a clearer picture of how joblessness is changing, particularly over the short-term.''
There was another useful feature of the series, as only citizens or permanent residents were eligible to receive the benefits.
The results were striking, Mr Gordon said. The biggest falls in benefit rates had been in the regions with the strongest population growth.
They were Auckland, which received the majority of overseas migrants, and the Bay of Plenty, which attracted many New Zealanders either returning from overseas or moving within the country. That suggested people were largely moving to where the jobs were.
In contrast, there was a common theme among the regions where benefit rates had increased in the last two years: they all had relatively large exposures to dairying.
The two worst performers were Taranaki and Canterbury.
On the positive side, with milk prices back to about average this season, and expected to be a bit above average next season, there should be benefits of growth shared more evenly between the main centres and the rural regions over the next two years, Mr Gordon said.
