New Zealand's rock star economy takes centre stage as currency climbs

Australians are going to have to get used to New Zealanders going on about how much better their economy is.

Paul Bloxham, the HSBC economist who first called New Zealand a rock star economy, says the New Zealand dollar is going to be strong for some time because the NZ economy is strong.

The New Zealand dollar was at 98.27 Australian cents on Friday, up from 98.18 cents on Thursday and it is expected to reach parity.

The last time the New Zealand dollar passed the Aussie dollar was on 18 October 1973 and it only managed it for a few hours, Bloxham said on TVNZ’s Q+A program on Sunday.

The New Zealand economy is outperforming every other Organisation for Economic Cooperation and Development (OECD) economy.

“That’s why we’ve been describing New Zealand as a rock star,” Bloxham said.

It was the fastest growing of the 34 OECD economies in the past year.

“And, we think that situation’s going to continue this year as well,” Bloxham said.

The Australian economy, in contrast, is at the end of a mining boom. Mining investment is falling and the rest of the economy is “so-so”.

“So it makes sense that the New Zealand dollar is strong relative to the Aussie dollar, and we expect the situation to persist for some time,” Bloxham said.

In New Zealand, there was an upturn in construction from the Canterbury rebuild and the housing market was booming in Auckland.

Bloxham acknowledged dairy prices had fallen sharply but said dairy production was still rising and the domestic economy was doing very well.