Economists see the economic growth of New Zealand wearing off and "on the rocks" as temporary growth factors are predicted to slow down. Previous reports have tagged New Zealand's economy as the "envy of the world" with a gross domestic product or GDP growth of 3.3 percent and an unemployment rate of 5.6 percent.
However, the country's top economists said the growth rate has become "unsustainable." In a press briefing in Auckland, economists noted that New Zealand depends too much on the reconstruction in Christchurch. They feared economic growth will slow down once the rebuilding is done.
Dominick Stephens, Westpac chief economist, said New Zealand recent growth relies heavily on the Canterbury earthquake rebuild, increase in net migration and low interest rates. Stephens added that the surge in migration is largely because of New Zealanders returning home. He said this trend will not continue at its current rate for long.
He predicted that Australia will make a "comeback" as economists forecast a zero net migration for New Zealand by 2018. Stephens also said the country's interest rates will be large enough to "crush the housing market." The Westpac chief economist said he is afraid his predictions will happen at the same time.
Sharon Zollner, ANZ senior economist, feared New Zealand's economy will not have a soft landing when its growth slows down. According to Zollner, the Kiwi economy has three gears namely first, fifth and reverse. For New Zealand to cushion its economic slowdown while experiencing high growth is "unusual."
She said the economy has had an admirable run but growth has become moderate. However, Zollner does not see this as a "bad thing." She believes New Zealand cannot sustain 4 percent growth. The country should be lucky enough to sustain a 3 or 2.5 percent growth.
She warned New Zealand is at risk from a potential economic slowdown in China. Reports said Chinese authorities have loosened housing policies to stop a decline in property prices.
BNZ senior economist Craig Ebert said he has observed a surge in international enquiries about the upcoming election. He declared that if the government changes, it might bring a different agenda.
When asked about the National party's plan to increase the subsidies of first-time home buyers, Ebert said the policy will only have a "marginal effect" on the entire housing market.