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Economy to face growing pains during global rebound from Covid-19 - economist

New Zealand’s economy is set to face growing pains as the world rebounds from Covid-19.

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That’s according to an economic forecast from ASB. Source: Breakfast

That's according to an economic forecast from ASB, which predicts increased demand across the globe will coincide with high shipping costs and pressure on freight.

Chief economist Nick Tuffley says while industries like construction are booming, supply chain and skilled labour limitations will continue to pose challenges. 

“A lot of the activity that didn’t take place over the first half of 2020 is taking place now, and has pushed shipping demand and global commodity prices higher as global demand for goods and services recover.”

Container ship at Ports of Auckland (file picture). Source: istock.com

More demand does mean more gains for New Zealand commodities such as fruit and dairy.

With house prices having risen by 27 per cent over the past year, Tuffley says house price inflation is predicted to slow to 10 per cent year on year by end of 2021, with a further cooling to five per cent by end 2022.

“The growing headwinds that have picked up over the past year, including the Government tax changes, will slow investor demand and we may also start to see some natural slow down with house prices very high relative to incomes, and mortgage rates not likely to fall any lower,” Tuffley said.