13 Dec 2010

NZ not matching Australian growth - economist

7:13 am on 13 December 2010

Goldman Sachs economist Philip Borkin says New Zealand's purchasing power with the rest of the world is not translating into business investment to the same extent as it is across the Tasman.

New Zealand's terms of trade rose 3% in the three months to September, due to import prices falling, and export prices holding steady.

A rise in the terms of trade means that a larger volume of imports can be purchased for every dollar of exports sold.

Mr Borkin says strong commodity prices could push the terms of trade higher still.

But the improvement is not having the same economic benefit that the Australian terms of trade boom's having.

"One of the problems New Zealand is having is the level of debt - not only household, but also pockets of the agriculture sector," he said.

"The economy is still only grinding along and not experiencing the same growth as Australia."