New Zealand

RGE's Q1 2010 New Zealand Outlook

With the RBNZ likely to stay on hold through H1 2010, interest rate hikes do not threaten a resumption of the housing market correction until mid-2010 at the earliest. The Reserve Bank of New Zealand worries, though, that New Zealanders may revert to their spendthrift ways as the terms of trade improve with the strengthening of commodity prices and the currency. Policymakers have been trying to restructure New Zealand's economy to a more sustainable model, unlike its current housing-centric one.

Fiscal policymakers eschewed a second stimulus package to restrain its budget deficit and to avoid perpetuating household financial imbalances. New Zealand's private sector debt stood at more than 90% of GDP as of 2009. Tax authorities are currently investigating ways to redesign the tax structure to reduce inequity and disincentivize unproductive...

Read the Q1 2010 New Zealand Outlook.