Analysts at ANZ explained that the Australian and New Zealand economies are facing broadly similar economic headwinds and tailwinds at present. Both have very high house prices and household debt.
Key Quotes:
“However, with house prices falling in Australia but steady in New Zealand, this risk remains primarily confined to Financial Stability Reports in New Zealand, whereas it is garnering increasing attention in Australia. On the other hand, businesses over the ditch are feeling more confident, reflecting that per capita growth has lifted well above that in New Zealand of late.”
“Fiscal policy is stimulatory in both countries and exporters are similarly exposed to China. Domestically, the main risk presently in Australia surrounds where and when the housing market will bottom, while in New Zealand, it is that business pessimism could become a self-fulfilling prophecy.”
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