NZ Economy: NZ Set For Rapid Growth
June 11th, 2010
The IMF says NZ is likely to grow faster than most of the developed world in the medium term. It points to rising commodity prices and a growing share of exports going to Asia as positive for the NZ economy, but warns external debt levels are still too high, and if interest rates rise it will be more of a burden on growth. The organisation says NZ’s sustainable growth rate over the medium term will be a respectable 2.3%, but short of Aust’s 3%.
The IMF says NZ’s involvement in the fast growing Asian economy will help. It forecasts a sixth of New Zealand’s exports will go to China. But it says the gap between NZ and Aust is increasing. It notes Aust will have a slight advantage in terms of growth in the input of labour, but there is no difference between the two economies in terms of growth in total factor productivity, or how effectively inputs of labour and capital are used. However capital investment is expected to grow half as fast again in Australia as in NZ, and NZ is not likely to close the large income gap between the two nations.
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