During the last quarter, the New Zealand economy and markets continued to perform strongly with New Zealand set to be one of the fastest growing economies in the OECD this year. Key drivers of growth continue to be the Canterbury rebuild, dairy exports and a low interest rate environment. The boom is seeing near record levels of consumer and business confidence and with rapidly rising house prices this has heralded the beginning of a monetary tightening cycle by the Reserve Bank. As one of the only countries in the world to begin tightening, this has already led to a very strong exchange rate and will now put upward pressure on interest rates.
Clearly with such a strong exchange rate against all major currencies this is not an easy environment for the export sector. However most exporters are learning to cope with a high exchange rate by continuing to improve their efficiency, productivity and business models.
Equity markets both in New Zealand and globally remain buoyant. This is leading to high levels of initial public offering (IPO) activity with a number of new listings coming to market in the current quarter and many more slated for the remainder of the year.
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