Last week, economists with HSBC boldly predicted that New Zealand will be the “rock star” economy of the developed world this year. And now economists with Citigroup are following suit, with a forecast that suggests New Zealand could be the “bright star” of 2014. If other institutional economists pile onto these rosy forecasts, they’ll be forced to come up with ever more inventive characterizations.

HSBC predicts New Zealand’s economy will grow by 3.4 percent this year, which would be the fastest pace since 2007. However, Australia’s economy typically outperforms New Zealand, as evidenced by a long-term growth trend of 3 percent for the former versus 2.5 percent for the latter.

But New Zealand looks like it pulled ahead of Australia by three-tenths of a percentage point in 2013, with the consensus forecast for gross domestic product (GDP) growth coming in at 2.7 percent. According to data aggregated by Bloomberg, that gulf in performance will likely persist this year, with the Australian economy forecast to grow by 2.7 percent versus the current consensus of 3.0 percent for New Zealand.

The latter statistic shows that, at least for now, HSBC’s forecast is somewhat of an outlier, though the data set for tiny New Zealand consists of the forecasts of just seven economists, while 34 economists are tracking Australia. Indeed, before getting too carried away about relative economic performance, it’s important to note the difference in scale between the two countries.

In addition to being dwarfed by the vastness of Australia’s land mass, New Zealand’s population–around 4.4 million people–is just one-fifth the size of its neighbor. And based on 2012 GDP, its economy is roughly a tenth the size of Australia’s, with GDP that year of around USD157.9 billion versus USD1.5 trillion for Australia.

Now back to the forecasts. HSBC says three main factors are contributing to its prediction: rebuilding activity is still underway since the 2011 earthquake and is not predicted to peak until 2017; rising dairy prices, which are a boon for the world’s top dairy exporter; and a housing boom.

New Zealand accounts for about a third of the world’s exports in dairy products, a status which prompted Citi economists to colorfully dub its showdown with Australia as “the milk man” versus the “iron man”–Australia is a major exporter of iron ore. Unlike Australia, which is presently focused on finding a new source of economic strength from one of its non-resource sectors, the main challenge for New Zealand’s policymakers, says Citi, is ensuring the economy doesn’t overheat.

Of course, while a robust economy is certainly helpful for stock market performance, the two don’t always correlate perfectly. From the standpoint of a US investor, however, New Zealand has already demonstrated at least one performance edge: a stronger exchange rate.

On a total-return basis and priced in their respective currencies, Australia’s stock market came out ahead last year. The S&P/ASX 200 Index gained 20.2 percent, while the New Zealand All Ordinaries Index gained 18.3 percent. But in US dollar terms, the relative strength of their exchange rates completely upended this relationship, with New Zealand’s return coming in at 17.9 percent, while Australia eked out a gain of 3.3 percent.

While a weakening currency is key for Australia’s economy at this juncture, it’s eroding returns for US investors. Fortunately, most of the bleeding has already occurred, as economists forecast the aussie to trade around USD0.87 in 2014, which is near where it trades presently–at USD0.878. Meanwhile, the New Zealand dollar is forecast to decline slightly this year, falling to USD0.81 from USD0.82, though the upward rate bias of its investment bank could change that.

Given the proximity of the two countries, a number of companies in the Australian Edge coverage universe have significant exposure to New Zealand. Additionally, we track Telecom Corp of New Zealand Ltd (ASX: TEL, OTC: NZTCF), the country’s second-largest company by capitalization. And we’re not opposed to finding other income-oriented plays domiciled there, so long as they meet our criteria. In the year ahead, we’ll be monitoring the performance of New Zealand’s stock market to see whether it presents additional opportunities for long-term investment.