While the drivers for New Zealand’s economy remain largely intact, a sharper-than-anticipated slowdown in neighboring Australia poses a threat to growth, Prime Minister John Key warned.
“The big drivers of economic growth are net migration being strong, the Christchurch rebuild adding a lot of stimulus and huge investment in Auckland happening in infrastructure, and generally, putting dairy to one side, commodity prices being quite strong, it’s all going to help us,” Key told CNBC. “But if you say what can trip us up, unquestionably Australia is a big factor, because [it’s] a big part of our economy,” he added. Other risks stem from a continued loss of momentum in China’s economy as well as the domestic housing market, he said.
Australia – New Zealand’s largest trading partner – is a critical destination for Kiwi producers and manufacturers. Last year, New Zealand exported almost $9 billion of goods to Australia, creating 18 cents of every dollar of export revenue New Zealand received, according to the New Zealand Institute of Economic Research. Its top bilateral exports are oil, gold, wine and cheese.