The evidence that the Australian economy is operating with excess demand continues to pile up. We learnt this week that private capex growth surged to a two-year high in Q4. Moreover, with firms turning more bullish about their near-term investment plans, momentum in business investment is likely to remain firm. Elsewhere, former New Zealand PM Jacinda Ardern has joined the record number of Kiwis who have moved to Australia over the past year. Given the much tighter labour market in Australia, New Zealanders are unlikely to be rushing back home anytime soon. The resulting weakness in population growth will weigh on New Zealand's recovery, keeping the RBNZ on the sidelines for some time to come.
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