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New Zealand is proving surprisingly popular despite being near the end of the earth. So much so that policy makers keep having to rewrite their economic forecasts.


A record influx of migrants in the past two years has seen more people seeking work, reducing pressure for wage rises and helping to keep inflation well below the central bank's target. This encouraged the Reserve Bank of New Zealand to reverse policy in 2015, cutting interest rates four times in six months and saying further easing is possible in 2016.



New Zealand's population grew 2 percent in the year through September to 4.6 million, the fastest pace in more than 20 years.


By contrast, Australia's population growth slowed to 1.4 percent in the year through June as the economy weakened, making it less attractive to migrants. About 21,300 New Zealand citizens departed for Australia in the year through November, down from 48,600 three years earlier, according to government figures.


Foreign student arrivals to New Zealand have surged 82 percent in the past two years as institutions attract young Indians and Chinese, while the number arriving on work visas has increased 25 percent since 2013 amid increased demand in the construction and software development industries. The U.K. was the biggest source of workers followed by France, Australia and Germany in the most recent 12-month period.

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Kiwi Markets Stunned by Rate Cut Almost No One Saw Coming


New Zealand's dollar tumbled more than 2 percent against the greenback and two-year yields plunged the most since August 2011 after Reserve Bank Governor Graeme Wheeler lowered the official cash rate by a quarter point to 2.25 percent, a move predicted by just two of 17 economists surveyed by Bloomberg. The kiwi has fallen 1.4 percent over the past week, the biggest slump among 31 major currencies


.... maybe this will give Glen Stevens some courage, with the AUD getting above 75c to US$1.00 in the last few days (has slipped back to 0.7490)

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The outlook for global growth has deteriorated since the December Monetary Policy Statement, due to weaker growth in China and other emerging markets, and slower growth in Europe. This is despite extraordinary monetary accommodation, and further declines in interest rates in several countries. Financial market volatility has increased, reflected in higher credit spreads...


..... There are many risks to the outlook. Internationally, these are to the downside and relate to the prospects for global growth, particularly around China, and the outlook for global financial markets. The main domestic risks relate to weakness in the dairy sector, the decline in inflation expectations, the possibility of continued high net immigration, and pressures in the housing market...

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