Business confidence points to surge in New Zealand economic growth

New Zealand could see an annual economic growth of 3 percent according to the results of a quarterly business confidence survey, a leading economic think- tank said Tuesday.

The survey by the New Zealand Institute of Economic Research ( NZIER) showed 32 percent of businesses expressed confidence in the economy in the September quarter, up from 30 percent in the June quarter.

"Domestic trading activity, a very good indicator of GDP growth, rebounded to 11 percent from 5 percent, reversing a small drop in June. This is consistent with around three percent annual GDP growth," said a statement from the NZIER.

"Businesses are optimistic, activity is rebounding and this is being gradually realized into more jobs and profits," NZIER principal economist Shamubeel Eaqub said in the statement.

Costs and prices remained subdued in September and while capacity pressures were lifting, they remained at an historically low level.

The survey was conducted after the Reserve Bank of New Zealand announced last month new loan-to-value ratio (LVR) speed limits, where only 10 percent of new mortgages could be higher than 80 percent of the property's value.

The measure, implemented from this month, was aimed at curbing the country's runaway housing prices, but financial services sector firms expected interest rates to rise also.

Economic activity for the year to the end of June was up 2.7 percent, according to the government statistics agency, Statistics New Zealand.