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BNZ thankful to be in New Zealand

BNZ thankful to be in New Zealand

(21 December 2011 — New Zealand) BNZ head of research Stephen Toplis presented a positive outlook on New Zealand’s growth this week. His main message was to be grateful for living in New Zealand because the rest of the developed world is a mess.

Despite the Christchurch earthquakes, he said, 'New Zealand has one of the fastest growing western economies - that's quite a remarkable performance.'

Meanwhile the United States and Europe is in 'complete disarray'.

The US housing market was still showing a high level of mortgagee sales, reflecting a structural problem that would take years to resolve, and Europe faced recession and '10 years of pain' before it would fully emerge from its current crisis.

Toplis said in his view the economy would continue to grow modestly despite international headwinds, with farming and construction providing most of the impetus.

While meat and dairy were enjoying good market and growing conditions, 'construction will play a big part in growth over the next 12 to 18 months,' he said.

A likely recession in Europe would affect New Zealand exports, but with just 10 percent of exports going to Europe - and most of those to the stronger economies of France and Germany - the impact would be limited.

BNZ is forecasting growth in gross domestic product of 2.3 percent next year, rising to 2.7 percent in 2013, while unemployment is tipped to fall from 6.3 percent this year to just 5 percent in 2013.

'Offshore developments will continue to be the bane of our lives,' said Toplis. 'Whatever the end result, just be thankful you live in New Zealand.'

He said the country still has a sound banking sector, relative political certainty, a floating exchange rate and the right exports for current global demand.

'For these reasons we cling to our view that the New Zealand economy can continue to fumble its way ahead, albeit that the task is becoming more difficult by the day.'
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