Boost for Bay as economy rocks on

Andrew Coker says the strong national economy is providing business confidence in the Bay underpinned by a strong kiwifruit market and private investment.

New Zealand's "rock star" economy is boosting business confidence in the Bay and encouraging growth.

Paul Bloxham, HSBC chief economist for Australia and New Zealand, said yesterday the strong kiwi backed his widely-reported comment last year that the country had a "rock star" economy.

"It is a reflection of the fact that the New Zealand economy is strong, it's a reflection of the fact that New Zealand is outperforming every other OECD economy over the recent period, that's why we've been describing New Zealand as a rock star," Mr Bloxham said.

"It was the fastest growing economy of the 34 OECD economies last year, and we think that situation is going to continue this year as well."

The kiwi dollar also rose to a fresh record against the euro and commentators said it was likely to continue to break new ground as a stronger local economy contrasted with weakness in Europe.

The kiwi touched 71.20c over the weekend, and was trading at 70.95c at 8am yesterday.

Tauranga Chamber of Commerce interim chief executive Toni Palmer said while the high dollar was a concern for exporters, it also encouraged growth in the region.

"A strong economy nationally filters down and gives our local businesses some certainty. This is critical for forward planning and encourages growth. More jobs will be created and from this more local spend," she told the Bay of Plenty Times.

"The high dollar is a concern for our exporters, the high against the Australian dollar especially is new territory. The short term should be covered by forward purchasing of rates but there could be more of an impact if this continues long term. We should feel very proud that a small nation like New Zealand is achieving global recognition for our economy."

Priority One chief executive Andrew Coker agreed the strong economy was lifting confidence.

"Certainly, a lot of businesses are busy employing people at the moment. The challenge with that is the ability to attract and recruit skilled workers here.

"We're not relying on a Canterbury rebuild or a heated Auckland property market. We're really fortunate that we're underpinned by a really strong kiwifruit market and we've got private investment like the port's dredging of the harbour making really strong economic growth."

The head of research at Craigs Investment Partners in Tauranga, Mark Lister, was hesitant to support the rock star rating. "I guess we are a rock star economy if you compare us to Japan or Spain or California or even Australia at the moment but we've still got issues we need to work through.".

The strong kiwi was a result of many factors but one of the main ones was the high migration into the country, he said.

"Unfortunately for us in the Bay of Plenty a lot of that migration is going to Auckland and is not getting down here.

"Tauranga's in pretty good shape because we'll always have that proximity to Auckland and we'll always have the best beaches in New Zealand, the kiwifruit's rebounded and the port's going really well. We're about middle of the pack."

While the strong competition felt in Auckland had not made it to the Bay, local businesses were likely to benefit from the trickle-down effect.

"Auckland's housing supply and infrastructure are already bursting at the seams. It can only be so long before places like Tauranga start to see even stronger benefits from Aucklanders relocating or even some businesses putting some of their operations down here."