The country’s economists have cheered up a bit.
The latest New Zealand Institute of Economic Research survey of economic forecasts show a slight up-tick in the outlook by economic forecasters, despite the overseas economic turbulence of the past six weeks.
The current outlook, averaged across the 11 private and public sector forecasters who follow the New Zealand economy, is for economic growth to accelerate from 1.5% in the year ending March 2011 to 2.6% in 2012 and 3.7% in 2013.
Inflation is forecast to average 2.7% over the next three years – uncomfortably near the top of the Reserve Bank’s 1-3% target range.
The average forecast is also for the New Zealand dollar to stay higher for longer and although demand for New Zealand’s main commodities is expected to keep exports resilient, the income from this will be more muted than it might otherwise be.
The Christchurch rebuild is expected to play a major part in economic growth over the period – and also, indirectly, in the relatively high inflation expected.
“The recovery is being supported by growth in residential construction, led by the Canterbury rebuild,” said NZIER principal economist Shamubeel Eaqub.
“Without that, growth averages 2.7%. Household spending growth will be steady, rather than accelerate, and public sector spending will ease. Exports will grow less strongly, due to weaker global growth and a higher New Zealand dollar.”