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Forex Flash: New Zealand economy steams forward – BNZ

Local data released during January suggested the NZ economy finished 2012 in pretty good shape. Indeed, surer signs of the Canterbury reconstruction boom getting underway shone through, as consumer confidence rose, and commodity prices kept climbing (at least in world terms). December trade figures even revealed an unexpected and rare ($486m) monthly trade surplus.

According to the BNZ Research Team, “There are negative offsets out there, however we believe the NZ economy will keep making reasonable headway – aided by the rebuilding in quake-impacted Canterbury, although impinged by ongoing fiscal consolidation. We’re forecasting GDP growth of around 3.0% p.a. over the coming few years. This will be enough to exert upward pressure on inflation and interest rates, from current lows, given the economy’s relative lack of supply potential.”

As such, “the grinding NZ economic recovery is well placed to continue, NZ commodity prices are trending higher, and the global economy is past the worst. As long as these supportive factors remain in play – NZD/USD dips below 0.8000 will be short-lived in our view.” the team adds.

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