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Debt levels an economic risk: BusinessNZ

NZ NewswireNZ Newswire 22/06/2016

High levels of household and farm debt are risks to the economy, BusinessNZ says in its latest survey.

Apart from that it considers New Zealand is in good shape.

"Nearly all economic indicators are are pointing in the right direction," the report says.

"Tourism is going from strength to strength, the construction industry outlook is still very positive and the agricultural sector, including dairy, appears to be weathering the storm of ongoing low prices reasonably well."

However, household debt levels "continue to rise precipitously" and agricultural debt, largely in dairy farms, leaves people vulnerable if asset prices crash or interest rates rise.

The debt levels pose "a key risk factor" in an otherwise positive growth outlook.

The report says migration continues to drive demand and shows no sign of abating in the short term.

"While significant migration flows have many positives there are also risks which need to be managed - ensuring there is infrastructure to meet the demands of a growing population and that land and housing are available for purchase, for example."

It acknowledges measures the government is taking on issues such as land supply but says the jury is still out on whether a gradual approach will succeed.

The survey, released on Wednesday, is BusinessNZ's June quarterly planning forecast for the sector.

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