Rebuild to be part of fast growth

LAURA WALTERS
Last updated 05:00 08/01/2014

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New Zealand has been touted as the likely "rock star" of world economies this year.

Economists expect New Zealand's economy to grow at a faster rate in 2014 than it did before the global financial crisis.

HSBC Australia and New Zealand chief economist Paul Bloxham has given the Kiwi economy the "rock star" label and predicts economic growth will hit 3.4 per cent this year.

He said the Canterbury rebuild, the housing boom and strong dairy demand would help New Zealand outpace its developed market peers.

"We think the New Zealand economy is firing on all cylinders."

The Reserve Bank of New Zealand (RBNZ) imposed mortgage lending restrictions in October last year to try and cool the hot housing market.

But they "haven't come to very much as an impact on the overall housing market".

"They'll have to lift rates to fix this problem."

Bloxham said more Kiwis were returning from Australia which helped fuel economic growth.

A move towards government surplus in the 2015 financial year had been "in the works for quite a while".

"While that could act as somewhat of a drag, it's not enough to stop New Zealand being the rock star economy of 2014."

Bloxham said HSBC expected interest rates to rise from 2.5 per cent to 3.5 per cent this year to slow the housing market.

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- © Fairfax NZ News

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