Double bounce
Prices remain high for New Zealand’s key export commodities. Coupled with a rapid post-drought rebound in dairy production in particular, this means a big income boost for the sector. Stronger export revenues will be an important pillar of accelerating growth, but will also add to burgeoning inflation pressure – we’re seeing early signs that after a long hibernation, inflation pressures are once again starting to stir. Eventually, stronger domestic inflation will force the Reserve Bank’s hand and we expect it to kick off a substantial tightening cycle in April next year.
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Westpac