New Zealand: Staff Report for the 2005 Article IV Consultation Discussions
IMF Staff Country Reports, May 5, 2005
Source details
- Canonical URL
- New Zealand: Staff Report for the 2005 Article IV Consultation Discussions
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Bibliographic details
- Published: May 5, 2005
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451830293.002
Key findings
- New Zealand’s GDP growth was particularly strong in 2004, at 4.8 percent, led by a surge in domestic demand.
- Private consumption grew by 6 percent, reflecting high employment growth, strong commodity prices, and household borrowing against rising housing values.
- Business investment also increased rapidly, powered by robust sales, and strong profitability.
Growth outlook and projections
- Growth is projected to slow in the near term, to about 2¾ percent in 2005–06.
- Consumer spending is expected to moderate owing to a cooling of the housing market and the effects of higher interest rates.
Drivers of recent expansion
- Surge in domestic demand.
- High employment growth.
- Strong commodity prices.
- Household borrowing financed by rising housing values.
- Robust sales and strong profitability supporting business investment.
Risks and near-term concerns
- Cooling of the housing market is expected to weigh on consumer spending.
- Higher interest rates are expected to moderate household borrowing and consumption.
Source: New Zealand: Staff Report for the 2005 Article IV Consultation Discussions (May 5, 2005).