A marked divergence in the fortunes of businesses

While rising profits and confidence are boosting sentiment amongst Australian businesses, the uncertainty surrounding the policies of the new government has continued to weigh on business confidence in New Zealand. This divergence in business confidence will probably be reflected in the relative performance of both economies this year. While we expect that GDP growth in Australia will accelerate from 2.3% last year to 2.5% this year, growth in New Zealand will probably hold steady close to 3.0%. If anything, the risk is that growth in New Zealand slows this year.