Outcome of election unlikely to hurt economy in short term, according to Westpac economist

Westpac chief economist Kelly Eckhold says the housing market could be one key area of difference.
Westpac chief economist Kelly Eckhold says the housing market could be one key area of difference. Photo credit: RNZ

The tax and spending plans put forward by the two major political parties - Labour and National - are unlikely to change the economic direction of the country in the short-term, an economist says.

A report by Westpac found the decisions of the next government could impact the long-term success of the economy.

Based on Treasury's Pre-election Economic and Fiscal Update released last month, Westpac chief economist Kelly Eckhold said: "Given the plausible election outcomes suggested by recent opinion polls, we think that New Zealand's short-term macroeconomic and financial market outlook is unlikely to change greatly after 14 October.

"That is not to say that specific sectors of the economy won't be impacted in a material way by the formation of a centre-left or centre-right government."

The housing market was one key area of difference, though there were unlikely to be changes substantive to economic forecasts, the labour market and inflation, Eckhold said.

"There are certainly some differences in approach in different parts of the economy. But from a macro perspective, we don't think it's actually making that much difference," he said.

"Rather, future revisions to our forecasts are more likely to be driven by other factors, such as developments in the global economy and commodity prices, migration trends and how these interact with the housing market, and evidence regarding ongoing persistence of domestic inflation and the resulting implications for monetary policy."

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