Tony Alexander

Economic Commentaries

NZ Observer – April 2015

Tuesday April 21st 2015

Continuing on with last month’s analysis focussing on Auckland’s projected high population growth rate, we point out that this growth results substantially from Auckland having the lowest median population age of all regions at 34.8 years. Canterbury is 39.4.
Many people have recently been making the claim that the small business sector is the engine of employment growth in the NZ economy. The data however say otherwise. Between 2010 and 2013 employment in small firms grew by 2.6%, medium sized firms 5.6%, and large firms 4.8%.

We look also at internal migration data compiled from the 2013 census. Auckland has lost people to the rest of the country as has Canterbury. But the data need to be treated carefully as for over half the people in the census no information is available on where they were five years before 2013.
Borrowing costs facing SMEs remain low and with inflation close to 0%, the expected timing for tighter monetary policy in the United States being pushed out, and another interest rate cut highly likely in Australia, borrowers face a benign environment.
The Kiwi dollar is close to parity against the Aussie dollar but has fallen against the greenback by 13% from a year ago and by 4% on a trade-weighted basis. The good outlook for NZ’s economy implies a high NZD for the next couple of years, particularly against the Euro, Japanese Yen, and the Aussie dollar. Greece’s exit from the Euro remains a possibility and could cause some volatility in coming months.