25 Jan 2017

NZ economy seen leading the pack again

10:14 am on 25 January 2017

The Australian economist who gave New Zealand the rock star economy tag several years ago has revived the label, saying booming tourism, surging migration and a strong construction sector mean the economy is roaring along.

International arrivals

Booming tourism and surging migration are expected to underpin the New Zealand economy's growth, HSBC Bank regional chief economist Paul Bloxham says. Photo: RNZ / Todd Niall

Sydney-based Paul Bloxham, the regional chief economist for HSBC Bank, said New Zealand once again was leading the pack of developed economies with annual growth expected to sit around 3 percent for the next couple of years.

The 2017 agenda was looking promising, he said.

"We think that the tourism and the construction stories will continue to be key drivers of New Zealand's growth in 2017," he said.

Mr Bloxham said the lift in global dairy prices helped turned the growth outlook more positive as well.

He said inflation would get back into the Reserve Bank's target band of 1-3 percent and cost pressures would increase although he expected the RBNZ would be cautious about raising interest rates.

Mr Bloxham said HSBC expected a first RBNZ rate rise early next year.

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