House building boom will lead recovery - economist

New Zealand's recovery from recession will be fuelled by a migration-driven housing construction boom, with Auckland leading the way, Westpac chief economist Brendan O'Donovan said yesterday.

O'Donovan's views, aired at the Mastercard-hosted Transtasman Credit Summit in Wellington, constitute some of the most optimistic economic commentary heard recently but will unlikely be welcomed by the Reserve Bank and Treasury, who are hoping for an export-led recovery complemented by housing market restraint.

In the international context, O'Donovan noted leading indicators were pointing to a strong recovery in global manufacturing activity.

"You'd be a brave person to stand in the way of them, they're telling us that growth is going to hit pretty strong momentum for the next six to nine months at least. Beyond that you can have pretty valid doubts."

However, he was far more positive about New Zealand where the "big story" was the ongoing migration turnaround.

Last year net inward migration was just 3500 but Westpac expected it would be about 25,000 this year.

To read the full NZ Herald story click here

Posted: 19 Sep 2009

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