2015 has been dubbed the year of the "Goldilocks" economy for New Zealand – not too hot, not too cold. Reserve Bank of New Zealand (RBNZ) forecasts are for annual GDP growth of 3% and falling unemployment supported by continued low inflation (if not a period of temporary deflation triggered by collapsing oil prices).

Domestic demand has maintained its momentum and, importantly, appears to be sustainable in light of continued increases in the economy's productive capacity. This lift has been attributed to two factors – labour force growth (both in size and participation rates) and increased business investment. The investment share of real GDP has risen from 21% in 2011 to 24% in 2014.

Business and consumer confidence remains high relative to historical norms. The latest NZIER Quarterly Survey of Business Opinion recorded a 21% net optimism level, while the ANZ-Roy Morgan Consumer Confidence Index was at 128.9 in January 2015, well above the decade average of 119 and up from around 110 in 2012.

Most of the risks are international.

Deflation and ongoing economic malaise in Europe may lead to a slowdown in demand for export products. Volatility in commodity prices also presents some uncertainties. International dairy prices fell 52% last year, although there are now early signs of a recovery. New Zealand is also vulnerable to a slowing in the Chinese economy, China now contending with Australia as our largest trading partner. On the other side of the ledger, the RBNZ estimates that the sharp drop in oil prices (down around 58% since the end of June 2014) will boost GDP by around 1%.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.