Domestic demand is picking up and we expect it to accelerate ahead. More investment is a cornerstone, as capital expansion broadens beyond the Christchurch rebuild. But, partly in association with rising investment, household spending has positive momentum too. We anticipate domestic demand growth will exceed 5% through the coming year, a decent clip faster than the 1.5% recorded over the past year. This is the sort of impetus that will put upward pressure on inflation, particularly of the non-tradable kind, and interest rates.
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