Growth forecast 3% – NZIER

The New Zealand Institute of Economic Research is forecasting economic growth of 3%, the best since 2007.

Strong growth this year will come from the resumption of ‘normal’ spending and investment patterns and surging Canterbury reconstruction. The reconstruction will contribute one-third of GDP growth this year (Figure 1). . .

The institute expects interest rates to rise and sees a risk in large policy shifts:

The general election later in 2014 will see a plethora of policy announcements from political parties, tempted by looming fiscal surpluses. Spending promises should be seen in the context of steeply climbing fiscal pressures associated with ageing, and the inevitable trade-offs that this will present. We do not expect the election to have any immediate impact on economic growth, but any large shifts in policy will shape future economic growth.

National’s policies have got us through the recession, back on track to surplus and growth.

The return to high taxing, high spending, anti-growth policies the opposition are promising would put that all at risk.

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