Positive economic growth

Strong macro economic indicators and improving dairy prices are all pointing towards a positive growth story for the New Zealand economy, a top economist says.

Speaking at a seminar at Karapiro, BNZ senior economist Doug Steel said New Zealand ‘‘stood out a long way’’ with a 3.6 per cent annual economic growth rate and was on top of the world in comparison to other countries.

These indicators including employment, migration, building consents and tour- ism were very strong, despite what had happened in the GlobalDairyTrade and dairy sector over the past two years.

Steel said the bank had lifted its milk price forecast to $6 per kilogram of milksolids for the current and next season following the recent GDT lift and the fall in milk production.

The New Zealand currency had hardly moved after the latest auction and Steel said this was because the market was more concerned with the upcoming US election.

He predicted a volatile time ahead for the US dollar regardless of who won and believed the New Zealand dollar would fall into the 60c range next year.

In overseas dairy markets, low grain prices would mean US dairy production would lift by 2-3 per cent in 2017.

In Europe, production had steadily declined since December last year and he expected this to continue.

There was also over 400,000 tonnes of skim milk powder in storage in Europe and Steel believed those stockpiles had contributed to whole milk powder selling at $3300 a tonne and skim milk powder at $2300 a tonne at the latest GDT auction.