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NZ Economy Flies Through 2016's Political Curveballs
Source: www.nzherald.co.nz
Source Date: Friday, December 23, 2016
Focus: ICT for MDGs, Institution and HR Management
Country: New Zealand
Created: Dec 26, 2016

New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry.

Government data this week showed the economy humming along, with September gross domestic product up 3.5 per cent from a year earlier. Construction is the centrepiece with a $37 billion pipeline of work estimated for the next six years, largely to meet Auckland's housing shortfall. At the same time, record migration has contributed to higher household spending, combined with throngs of tourists - both locals and foreigners - travelling the country and opening their wallets.

That's helped out local retailers in an environment where consumers are increasingly looking online for cheaper deals, and several high-profile chains have fallen over this year including Dick Smith Electronics, Pumpkin Patch and Wild Pair. It's also got the government thinking hard about how to get its share of the tax take from online purchases, although it's only managed to make it to online services with what's been dubbed the Netflix tax.

"We're in a pretty good spot, and if you think more broadly, the government books are looking pretty decent, so if you're looking from the outside, New Zealand's not a bad place to be in the end, hence we have got interest from offshore in investing and people wanting to come here," said Nathan Penny, rural economist at ASB Bank. "That growth is still feeding on itself continuing well into next year if not into 2018."

That's a far cry from the start of the year when a slump in global dairy prices had people on high alert over whether a slowdown in the rural economy would seep into the urban centres and potentially put the squeeze on the nation's lenders.

Instead, dairy prices recovered halfway through the year as production in Europe and North America slowed down and ASB is now picking Fonterra Cooperative Group will pay farmers $6.50 per kilogram of milk solids for the current season, past the nominal breakeven point and up from $3.50/kgMS in the 2016 season.

 

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