New Zealand's economy grew robustly in 2013, despite a number of headwinds including a slowdown in its major trading partners, natural disasters and currency strength. The economy posted its fastest pace of growth since 2009 for the third quarter, and is expected to grow at an annualized pace of 2.7 percent for the fiscal year ending in March 2014.
Lien said the economy was boosted by the recovery efforts following a major drought and the 2011 Christchurch earthquake, a trend she expects to continue.
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"It is important to remember that New Zealand is a very small economy and major infrastructure projects can have a significant impact on growth," she said.
However, alongside healthy growth comes inflation expectations, and New Zealand's property market is showing signs of overheating.
Along with many other market analysts, Lien expects the Reserve Bank of New Zealand to hike interest rates in March, from current levels of 2.5 percent, a move that will be positive for the Kiwi. New Zealand already has the highest interest rates among the G10; a rate hike would make it the first western economy to hike rates for some time.
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"The first rate hike from the RBNZ is expected in March and the prospect of tightening should fuel additional gains in the New Zealand dollar," Lien said, adding that the RBNZ is expected to continue on a rate hike path, raising rates to 4.75 percent (or by 225 basis points) in a little over two years' time.