Deficit real worry, not election result

Yesterday's final results from the September 17 election are unlikely to cause any ripples for the financial markets, which instead have been grappling with the prospect of more rate hikes from the Reserve Bank and a wider current account deficit, economists said.

Politics has been overshadowed by data showing the current account shortfall represented an estimated 8 per cent of gross domestic product over the year to June.

Stronger than expected economic growth of 1.1 per cent over the June quarter also raised the spectre of more increases in the Reserve Bank's official cash rate, which sits at 6.75 per cent.

"I think we are in for a tough 12 months but that's got very little to do with the election and more to do with the economy coming to the end of a good wave of growth and having to deal with some of the imbalances that have been created out of that wave," ASB Bank chief economist Anthony Byett said.

UBS New Zealand economist Robin Clements said the election outcome had diminished the uncertainty a little.

"In the interim, other things have come back on to the board as well, so I think it will pass without much of a ripple," Clements said.

Bank of New Zealand currency strategist Sue Trinh said the implications from the election had been assimilated but the outlook for the nation's current account was not good.

- HERALD ON SUNDAY