New Zealand's economy slows
New Zealand economists have revised the country's growth prospects downward by .6%. Despite the forecasted change, New Zealand's economy is still growing at an annualized rate of 3.9%, which is nothing to scoff at. In fact, it now has the fastest growing economy in the developed world. Economists attributed the slowdown to decreased milk production and new construction. New Zealand actually welcomed the news, which forced the New Zealand dollar downward against the USD. This will give New Zealand's exports a prayer at remaining competitive, after the NZD has risen by double digits against the USD. Yesterday's rise in US interest rates should help to prevent the NZD from rising in the short term. It is worth noting however, that New Zealand offers the highest interest rates in the developed world, despite having the strongest economy. Thus, we shouldn't expect investors to start taking capital from New Zealand just yet. The Financial Times reports:
The slowdown in the economy, which has been tipped for some time, follows a sharp tightening in monetary policy. Earlier this month the central bank raised rates for the seventh time in just over a year, to 6.75 per cent.
