Business booming, Labour loss looming

I don’t have the capacity to feel pity for David Cunliffe, but he has to be wondering what he has to do to catch a break.  He finally gets his hands on the Prize as leader of the Losers Party, and just about all the indicators continue to go south on him.   Michael Fox explains

Financial experts are united – next year could be a golden one for the New Zealand economy with all signs pointing to a prosperous 2014.

Commodity prices are booming, businesses are at their most confident in 20 years, the economy is among the world’s fastest growing, jobs and wages are predicted to rise and that confidence is filtering through to consumers who are starting to open their wallets.

New Zealand’s GDP growth was at its highest in four years in the last quarter at 3.5 per cent on the previous year – higher than Australia (2.3 per cent), the US (1.8), Britain (1.5) and Japan at 2.4 per cent.

Compared with Australia, once our largest trading partner but recently overtaken by China and whose economic growth outside the mining sector has relatively flatlined, our positive outlook is more stark.

Perhaps Cunliffe and Norman should move to Australia where their brand of “the sky is falling, we can spend our way out of it” policies will be more receptive.  

“Basically the interest rate rises that we’re expecting, they’re now baked into fixed-term mortgage rates, so you’re not going to save money by doing one or the other, really. It’s just how much risk you want to take on.”

Wage growth is also expected to be partly offset by inflation but Delbruck said it would not be “roaring away”, with a forecast inflation rate of about 2 per cent by early 2015 or about the midpoint of the Reserve Bank’s target range.

While house price inflation is expected to have peaked, Eaqub said the one threat to prosperity was the Auckland housing market where house prices are among the highest in the world relative to rents and incomes.

The Reserve Bank’s new loan to value restrictions had made the market more uncertain and, coupled with rising interest rates, were threatening to cause a drop in house prices.

“If house prices fall there is a lot of uncertainty about what impact it will have on the Auckland economy and if there will be any spillover to other parts of New Zealand mainly because so much of the economic recovery had been concentrated in Auckland and also Canterbury more recently.”

Homeowners, especially new ones in Auckland, had to be careful to ensure they could manage repayments in the shadow of rate rises and the possibility of falling house prices.

And with an adjustment in the Auckland housing market, yet another key election platform evaporates for the hapless Labour Losers.


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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