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New Zealand’s economic growth will accelerate next year and sustain that expansion in 2014 and beyond, boosted by the stimulus from rebuilding the earthquake damaged city of Christchurch, Prime Minister John Key said.
“The domestic stimulus from Christchurch is actually very strong for a long time, it doesn’t stop in 2013,” Key said in an interview on TV3’s “The Nation” today. He disagreed that growth will peak next year.
The Reserve Bank in September forecast growth will accelerate to 2.9 percent in the year ending March 2014 then slow to 2.2 percent a year later.
New Zealand’s central bank updates its forecasts next month, as does the Treasury Department which in the May budget projected 3.1 growth in 2014-15.
“The Reserve Bank is a little more conservative,” Key said. “If the Reserve Bank really believed that there would be no growth beyond 2013 to speak of then the Reserve Bank would cut interest rates.”
Central bank Governor Graeme Wheeler kept the official cash rate at a record-low 2.5 percent last month. Borrowing costs have been held at that level since March last year, just weeks after an earthquake killed 185 people and wrecked the heart of Christchurch, the nation’s third-largest city.
New Zealand economic fortunes are tied to the global recovery, Key said. Exports make up 30 percent of gross domestic product.
“We have got the country growing but not as fast as we’d like,” he said. “We are a nation that sells to the world, and if the world is slowing down then we slow down.”
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