New Zealand will be the "rock star" economy of 2014, with growth set to outpace most of its developed markets peers, according to HSBC, a stark contrast with neighboring Australia, which is struggling to maintain economic momentum.
"We think New Zealand will be the rock star economy of 2014. Growth is going to pick up pretty solidly this year," Paul Bloxham, chief economist for Australia and New Zealand at HSBC, told CNBC Asia's "Squawk Box" on Monday.
(Read more: Rate hike talk boosts New Zealand dollar)
HSBC forecasts the economy will grow 3.4 percent in 2014—the fastest pace since 2007 and well above trend growth of 2.5 percent. For 2013, the economy is expected to post growth of 3.0 percent, according to the bank.
There are three key factors supporting faster expansion, said Bloxham.
The first is spending on construction, including the rebuilding of Canterbury region that was ravaged by an earthquake in February 2011. "There's an enormous amount of construction that's going into building that region of the economy," he said.
Reconstruction spending is not expected to peak until 2017, and should continue to boost the economy for some time, Capital Economics wrote in a recent note.
(Read more: We can't influence 'currency war': New Zealand)
The second driver is the country's housing boom that has been fueled by low interest rates and a wave of net immigration over the past year.
While the Reserve Bank of New Zealand (RBNZ) tightened rules around home loans in October and is likely to begin hiking rates in the coming months, economists expect residential investment will remain robust.