Important Economic Factors

*Economic Growth
Economists are tipping that New Zealand's economic growth will slow this year from its five-year average of 3.8% to somewhere between 2 and 3 %. These expectations - which could make it harder to find a job in New Zealand - are based on: 

       - a strong dollar hampering exports, 
       - a slow down in the housing market 
       - reduced immigration.

At the moment signals are mixed. Exports and the housing market, both of which were expected to fall, are outperforming expectations. 

*The currency
Although some exporters are complaining about the high dollar, New Zealand's main exports - agricultural and forestry products - are achieving record prices. These high prices (around 15 percent higher than previous peak prices) are offsetting the affect of the high dollar to the extent that exporters in these sectors are not feeling real pain from the Kiwi dollar's strength.

*Immigration Figures
Owing to the introduction of tougher regulations, immigration figures for the year to December 2004 are down 57 percent on the previous year. New Zealand gained only 15,100 permanent and long-term arrivals in the year to December 2004, compared with 34,900 a year earlier. This is not good for the economy. The Government has countered by reducing the Skilled Migrant passmark to its lowest possible value. Provided a worthwhile proportion of those now being invited to apply for residence in New Zealand do so, immigration figures will increase again in 2005. 

* Trade Deficit and Consumer Debt
In recent years New Zealand has been running a high trade deficit - spending more on imports that it receives for its exports. Like their cousins in other English-speaking countries, New Zealanders have taken on large amounts of personal debt to fund house purchases and consumer spending. Unlike the USA or the UK, however, New Zealand's government is running a surplus and has little debt.

*House Prices
House prices have defied gloomy predictions. The average house price in New Zealand continues to rise, although there are regional variations. Since 2001, New Zealand's average house price has risen by more than 40%. This quarter's ASB housing confidence survey shows that confidence is returning to the market. In the October 2004 quarter, a net 7 percent thought it was a bad time to buy. Now a net 5 percent believe it's a good time to buy - a swing of 12 percent in sentiment. Banks report that mortgage demand has slackened a little but is still strong.

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