Economy Gains Momentum as Westpac Predicts 2-3% Growth

Westpac's chief economist Kelly Eckhold says the New Zealand economy is regaining momentum after a turbulent period. The latest economic overview from Westpac suggests that the country has weathered the disruption caused by the Iran war relatively well.

Eckhold expects economic growth of 2 percent over the full year, lifting to 3 percent next year. Exports are driving this growth, thanks to strong commodity export prices, a good tourism season, and solid trading partner growth.

The strong economy is also reflected in low short-term interest rates, which are helping construction and household demand. However, inflation remains high at 4.1 percent, largely due to the 20 percent jump in petrol prices caused by the conflict.

Eckhold expects headline inflation to stay above 3 percent until mid-next year. He also predicts that the official cash rate (OCR) will increase to 4 percent through next year to help bring inflation back to target.