Eaqub coined the phrase zombie towns, to refer to those with little or no economic growth. Photo / Christine Cornege
New Zealand's economy remains patchy and continues to give off mixed signals, says Shamubeel Eaqub, NZIER principal economist.
In a Herald video, he talked of dairy prices halving since February.
Watch: NZIER principal economist Shamubeel Eaqub
The economic stimulus of the Canterbury rebuild will wind down next year yet house prices in Auckland and Christchurch continue to rise fast, he said.
"I still feel quite optimistic about New Zealand because the underlying pace is quite good," Eaqub said, noting the economic recovery was not based on excessive borrowing.
"The underlying pace is still very good. People are still living within their means, still paying down debt and we're still managing to get growth," he said.
Residential property turnover remained low, he said.
New Zealand remains in the shadow of last decade's global financial crisis but Eaqub does not see inflation as a major threat.
"We haven't seen a lot of inflation in the last few years and currently it's running at just 1 per cent. Commodity prices are coming down, [there are] very few price increases across New Zealand, a few little hotspots but it's not really spilling over so we don't think inflation is the thing to be worried about," he said.
"We're much more concerned about the risks to growth particularly from things like falling commodity prices, the risk to the global economy, the geopolitical risks in places like Ukraine, Russia."
Dairy payout downturns were more of a threat to provincial towns than bigger cities, he said, illustrating the danger of being exposed to a single sector of the rural economy.
Eaqub coined the phrase zombie towns, to refer to those with little or no economic growth.
However, Auckland's outlook remains bright, particularly the labour market. "Eighty per of the new jobs in the last seven years are in Auckland, so if you want a job, this is the place," he said.
Eaqub has just completed his quarterly briefings in Wellington and Auckland and in a presentation told how the migration boost was partly student-driven.
"Much of the increase in arrivals has been driven by students and returning New Zealanders who have a different impact to residence and work-visa arrivals - for example, the type of accommodation or the need to set up a family household.
"Much of the increase is due to fewer people leaving mainly from the provinces. This means the usual geographically concentrated population boost to Auckland has not been as pronounced," he said.
"Net migration will remain positive until the Australian economy recovers, likely from mid-2015."
Economic recovery is coming but won't solve structural problems.