The economic outlook for New Zealand is bright, and China and Asia in particular will continue to play a vital part in this country's future, says Bank of New Zealand's head of research, markets Stephen Toplis.

'New Zealand has tremendous opportunities, focused on China, but don't forget the other Asian economies – and most of all be thankful to live in New Zealand because the outlook is almost second to none.
'We are looking at 2.5 per cent growth per annum for the next three to five years. That may not sound fantastic but we should be very happy with that.”

Asia will continue to play a key role in New Zealand's economic future, says Stephen Toplis, head of research, markets for the Bank of New Zealand.

Stephen says the growth will be driven by investment in construction in Christchurch and Auckland as well as investment in manufacturing.
The outlook for rural New Zealand is good and the dairy payout should add 2.1 per cent GDP in cash during the next 12 months, while the Christchurch rebuild will contribute 1.5 per cent.
Stephen says China is the most dominant feature for New Zealand's economy and Kiwis shouldn't be worried about that.
'Don't be afraid of this development. It just the way it is. If you've got umpteen billion people, [as in China], provided you don't bugger it up, it is inevitable you will be source of global activity.”
In 1991 less than one per cent of New Zealand exports went to China.
By 2012 it was 15 per cent.
'New Zealand's exposure to China doesn't reflect that everyone has benefited, as 75 per cent growth has been in the dairy sector and 20 per cent in wood. The rest of economy hasn't capitalised on the potential to move into that market.”

Tourism
It hasn't just been exports that have grown.
'In June 1990 there were 72 tourists from China in New Zealand. You could have named them. In the same month last year there were 17,000 tourists from China and that number is only going to get bigger and bigger.”
The Chinese economy will inevitably slow as it becomes more developed but that's not really a problem for New Zealand, says Stephen.
'China is so much bigger than it used to be – if it grew by just one per cent demand would still grow at a 35 per cent equivalent in sheer volume.
For New Zealand, it doesn't matter if China never grows again.
We simply can't supply them with the goods they need. We think of us being the food basket for China.
If New Zealand put all its food together it could feed 20 million people, which is some small suburb of some obscure city in China.”

Surplus
Stephen says the impression that 'everything you buy in shops is from China” is a myth. 'New Zealand has a trade surplus with China. We are exporting more to China than we are importing from China.”
The biggest threat to the New Zealand economy of things going wrong in China is the impact that will have on Australia, especially the mining industry.
Stephen predicts an end to quantitative easing (money printing) in the USA will see that dollar strengthen, which is good news for New Zealand exporters. 'We do believe the New Zealand dollar will drift lower, the only exception will be the New Zealand dollar against the Australian dollar.
'Interest rates will go up and that's good as the country is growing. The only way they will go down is if we go into recession.”
His advice to anyone with debt or mortgages is to take moves to protect themselves and manage their debt in the face of expected rises.

# Stephen Toplis was one of the keynote speakers at Nutritional Values,
the 5th New Zealand and Australian Avocado Growers'
Conference in Tauranga in September.