NZ's 'rock star economy' even better than we thought - HSBC

HSBC's chief economist in Australasia says the New Zealand economy has further entrenched its 'rock star' label after achieving growth beyond what was initially anticipated in 2015 and 2016.

Paul Bloxham was the first person to describe New Zealand's economy as a rock star back in 2014, but there was some doubt about how long gross domestic product (GDP) could continue to grow.

Mr Bloxham told The AM Show his decision to describe the economy in those terms appears to have been justified after the final numbers came back showing economic growth was even better than first thought.

"The upward revisions to GDP in the last print showed that not only was 2014 a strong year, which it turned out to be, but 2015 and 2016 were a lot stronger than the statistics bureau originally thought," he explained.

"Growth over those three years previously looked as though it averaged 3 percent, and now it looks like 3.75 percent. So now we feel a little bit more vindicated with this idea that New Zealand was a rock star.

"It was three years of quite strong growth."

While Mr Bloxham predicts growth will continue in New Zealand, he's less optimistic about what is to come amid signs supply is drying up.

"Growth slowed a bit last year - the construction industry slowed down a bit - and that's one of the new themes for this year as well is, 'What's slowing that down?'"

"We don't think it's demand, we don't think that it's the economy slowing down - global growth is picking up, the dairy sector's doing okay, tourism is lifting - and those are all supportive.

"We think, rather, that it's to do with supply, and that it's harder and harder to get labour."

Mr Bloxham says the recent success of Australia's labour market has quelled the steady stream of immigrants arriving here from across the Tasman, with many more opting to work over there instead.

"I think what we're going to see is growth continuing, but that growth requires that you have labour to meet the demand," he said.

"If you look at where you've been, certainly that 'rock star' thing sits very well over the last few years. I think the thing that's going to be more of a challenge for maintaining the rock star call is that the rest of the world is picking up now as well."

He says the economic health of the US, Europe, Asia and Australia means while we may have success, it will be synchronised with the global market.