The Economy Hub: Good times roll as economy picks up.

Despite the global instability there was little on the domestic horizon that would spoil New Zealand's economic party. Photo / Michael Craig

New Zealand's economy is on a roll, says ANZ chief economist Cameron Bagrie.

"Look at the positive side of the ledger: tourism is booming, dairy prices are in recovery, the housing market is going gangbusters, migration is trundling along nicely and firms' biggest constraints at the moment are finding labour," he said.

Now it looked like we will be reporting a 3.5 per cent GDP growth figure next week, "which is absolutely world class and if you look at the forward indicators the business confidence survey is flagging 3.5 to 4 per cent growth. So let the good times roll on."

Talking on The Economy Hub show today Bagrie did acknowledge issues with low wage growth and global political instability.

"But the temptation is to strip out all the positives and you're left with something negative," he said.

But with the average Auckland house price hitting $1 million this week there was a growing sense of unease about rising inequality.

Low interest rates and the fuel it had poured on the housing market was one of the reasons people were feeling uneasy about the economy despite the positives, said NZEIR senior economist Christian Leung.

"So for those that have the equity to make use of the leverage from low interest rates, they've been able to gain from asset prices increases. For those saving for a deposit the surge in house prices has only seen houses get further an further away."

We were moving into an era where politics was going to dominate economics more so than central banks, Bagrie said.

Economic leadership to address inequalities was what was needed to ensure we didn't fall in to the populist trap as the general public pushed back.

Despite the global instability there was little on the domestic horizon that would spoil New Zealand's economic party, Bagrie said.

"The current account is reasonably well contained, net external debt is far lower than it was prior to the GFC, we've obviously had too many bottles of wine in regard to the property market but it looks like that's going to level off, " he said. "Locally we are in good shape."

It was true that GDP being inflated by strong net migration, Leung said.

But even on a per capita basis GDP was increasing now.

"But contrast that with an economy in contraction because of population decline and we definitely know what side of the equation we want to be on."