IMF praises New Zealand economy

The International Monetary Fund (IMF) says the New Zealand economy is operating at "close to potential", but warns the future outlook is "tilted to the downside".

In its latest review of how New Zealand is doing, the IMF praised its low unemployment figures and rising wages, crediting boosts to the minimum wage.

"New Zealand's economic expansion is still solid," it said. "Despite the loss of momentum in economic activity and a cooling in housing markets, output has remained close to potential, and the unemployment rate has continued to decline. 

"Broader price and wage pressures have not yet emerged even though the economy has operated close to capacity for some time. "

GDP growth has cooled off in the past couple of years, which the IMF put down to the end of post-quake reconstruction in Christchurch, a drop-off in net migration and the end of the Auckland housing boom.

"Downside risks to the economic outlook in New Zealand have increased, however, reflecting higher downside risks to the global economic outlook," the IMF said.

Finance Minister Grant Robertson told RNZ it was "refreshing to see the international view of New Zealand's economy is positive".

"Despite some who will always take the glass half empty approach, we're doing relatively well against a backdrop of global economic uncertainty."

One recommendation the IMF gave was for New Zealand to consider a tax on vacant land, as part of wider tax reforms. Robertson has already started looking into that, despite Treasury and IRD's opposition.

"There are a few things the Treasury and I differ on, but this is one we think is worth investigating," he told in June.

National Party leader Simon Bridges attacked the Government over this week's GDP figures, which showed 2.1 percent growth over the 12 months to June - ahead of the OECD average of 1.6 percent.

"Kiwis are paying the price for Labour's weak and incompetent approach to the economy," he wrote on Twitter on Thursday.

"GDP is down yet again and the PM and Grant Robertson continue to blame everyone but themselves. Labour is failing to deliver, plain and simple."