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Kiwis now beating Aust on economic growth

AAP logoAAP 15/09/2016 Garry Shilson-Josling, Economist

Australia was winning, then New Zealand equalised before moving ahead. And no, this is not about rugby - it's about economic growth.

New figures from Statistics NZ show that New Zealand's gross domestic product (GDP) rose 3.6 per cent over the year to the June quarter, compared with 3.3 per cent for the equivalent measure in Australia.

Australia had grown 2.8 per cent through 2015, shading NZ's 2.3 per cent. But NZ drew level, with both at three per cent, in the March quarter before racing ahead.

Despite NZ's current faster growth rate, its performance over the past decade has lagged Australia's.

NZ grew at an average annual rate 1.9 per cent over the 10-year stretch, compared with Australia's 2.8.

The gap resulted mainly from Australia's better performance in the wake of the global financial crisis in 2008.

Over the most recent five years, NZ has just shaded Australia, growing at an average of 2.9 per cent a year versus Australia's 2.8 per cent.

And it looks set to maintain the upper hand for the time being.

"The New Zealand economy is clearly strengthening," ANZ senior economist Sharon Zollner said in a report.

Nevertheless, like most economists in NZ, she expects more cuts in the official cash rate, currently at 2.0 per cent, with one later this year and another early next year.

"Growth is not determining New Zealand monetary policy at the moment; it is all about low inflation and that's expected to remain low courtesy of the strong NZD, despite the economy growing at an above-trend rate," Ms Zollner said.

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