New Zealand's economy is growing so nicely, it may have to raise interest rates soon.
The latest unemployment report in New Zealand showed a big drop in the unemployment rate during the first quarter, from 7.1% to 6.0%.
As a result, New Zealand might soon as fourth advanced economy (after Australia, Israel and Norway), soon start raising short-term interest rates, currently at 2.5%. If that happens, the attractiveness of the New Zealand dollar as a target currency in carry trade will again increase.
The seemingly ever escalating Southern European debt panic might derail this, but probably not since New Zealand is very far away from Europe (It's on the other side of the planet) and has therefore stronger economic ties to Australia, America and Asia than with Europe.
Furthermore, the biggest European economy, Germany, shows increasing signs of booming despite the problems in Southern Europe, with manufacturing orders up 5% compared to the previous month, up 10.4% compared to 3 months earlier and 30% compared to 12 months earlier.
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.