IMF positive on NZ

The Herald reports:

The International Monetary Fund expects the New Zealand economy to grow 3.5 per cent this year before easing back to a 2.5 per cent pace by 2016, in line with its average since the start of the century.

The economic expansion is becoming increasingly embedded and broad-based, it says, driven by supportive financial conditions, high commodity prices, resurgent construction activity and a substantial increase in net immigration.

The IMF supports moves by the Reserve Bank to tighten monetary policy and by the Government to return to a fiscal surplus.

But though it sees New Zealand banks as well capitalised and sound, it points to their reliance on offshore borrowing as a continuing source of risk over the medium term.

An orderly exit from the quantitative easing undertaken by larger advanced economies would likely benefit New Zealand by bringing the exchange rate down.

Our high exchange rate is more because of the weakness of other economies, and their decisions to print money.