31 Oct 2016

NZ's economic growth could get 'Trumpled'

10:02 am on 31 October 2016

The outlook for New Zealand's economy is rosy but could turn sour if Donald Trump becomes the next president of the United States, according to ASB Bank.

Donald Trump

Donald Trump Photo: AFP

The bank's latest quarterly economic forecasts indicate New Zealand has the strongest annual economic growth outlook among developed countries, with an annual growth rate of 3.5 percent over the next year.

But chief economist Nick Tuffley said all that could get "trumpled" if Hillary Clinton fails to become US president.

"The main concern we would have is if we moved into an environment where there is a lot of trade friction, especially with China," he said.

Mr Tuffley said the Reserve Bank's Official Cash Rate was expected to fall further to 1.75 percent next month, but he did not think that would necessarily translate to lower interest rates for consumers.

"Banks are suddenly finding that the traditional source of funding itself - which is deposits - is not enough to adequately cover that added borrowing demand so that does change the dimension and push banks towards more wholesale funding which generally tends to be more expensive," he said.

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