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NZ economy can withstand quake, Trump

NZ Newswire logoNZ Newswire 29/11/2016

Two deaths have been linked to the quake © AP Photo/Angela Morgan Two deaths have been linked to the quake New Zealand's economy is strong enough to withstand the twin tremors of the Kaikoura earthquake and the election of Donald Trump as president of the United States, says an economic consultancy.

The NZ Institute of Economic Research, in its quarterly predictions, says tourism and the construction boom will protect the country against the combined impacts.

"The New Zealand economy is in good shape, which should provide a buffer against these recent shocks," said senior economist Christina Leung.

Donald Trump © Reuters/Mike Segar Donald Trump Continued migration is set to support housing demand in the next few years and NZIER expects GDP growth to average 3 per cent of the coming five years.

She said the impact of the 7.8-magnitude quake will be largely isolated to the regions that bore the brunt of the damage while the US election result has provided added uncertainty.

It was not clear what policies Trump flagged prior to the election will be acted on, but Ms Leung said markets appear to have taken his win in their stride.

His election success had heightened inflationary expectations globally while there were signs that New Zealand's inflation, currently below the 1-3 per cent target band of the Reserve Bank, was lifting, spurred on by strong growth in construction costs.

That, added with the solid growth of the economy, made the NZIER confident that there would be no further cuts to the official cash rate of 1.75 per cent this cycle.

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