New Zealand Economy Expected to Grow Stronger in 2014-2015

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By Reissa Su | December 17, 2013 12:53 PM EST

The economy of New Zealand is expected to grow even stronger in the next two years, according to the Institute of Economic Research. A survey of economic forecasts based from various economic and financial agencies said that New Zealand is expected to have a broad-based annual growth rate of 2.8 per cent by March 2014 and 3 per cent in the 2014.

Institute of Economic Research economist Shamubeel Eagub said the degree of uncertainty in New Zealand's economic outlook has been greatly reduced. Mr Eagub explained that when there is great uncertainty, forecasts of economic growth will vary.

Due to the reduced uncertainty, most of the economic forecasts point to towards a stronger New Zealand economy in 2014 and 2015. However, Mr Eaqub said the inflation rate will grow as the economy does since most businesses in the country will need to raise prices. Economists have also reached a consensus that interest rates will rise from early 2014 to ease some of the economic pressures.

According to Mr Eaqub, New Zealand's inflation rate may have an average of 2.5 per cent when the economy is also growing at a positive rate. Home construction forecasts in New Zealand are expected have almost 20 per cent growth every year with broad-based growth outside of Canterbury.

Strong international performance rankings

New Zealand was declared by Forbes as the second-best country for business in 2013, following Ireland which moved up to the top of the list from sixth place in 2012. Forbes listed New Zealand as the top country for business in 2012.

Despite dropping a spot, New Zealand remains one of the fastest-growing nations with a gross domestic product (GDP) growth of 2.5 per cent in 2012. New Zealand may be the smallest in the list of countries best for business, it boasts a $170 billion economy.

The country also achieved the best scores among the countries in categories like investor protection, personal freedom and lack of bureaucracy. New Zealand was recently named the least corrupt country in the world by Transparency International.

New Zealand has the highest score in the Corruption Perception Index, which means it is less tainted by corruption compared to other countries in the world. It is at the top, along with Denmark, getting the same score. Both countries have increased their scores from 90 in 2012 to 91 out of 100 in 2013. Countries closer to the 100 score are the least corrupt.

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