New Zealand Economic Forecast

New Zealand Economic Outlook

February 19, 2019

Available data suggests that growth maintained its slower momentum in the fourth quarter. Weaker household-spending gains appear to have materialized, as reflected by a rise in unemployment and dire electronic card transactions through year-end—and despite upbeat consumer sentiment and tepid inflation. In a similar vein, the external sector took a toll on growth: Weaker demand for dairy products by OECD and ASEAN countries in Q4, coupled with higher fuel prices, dragged the 12-month rolling trade deficit to an 11-year low at the end of last year. All this comes on the heels of a third quarter framed by easing domestic demand. On a brighter note, S&P Global Ratings revised its outlook to positive on the prospect of a sustained fiscal surplus over the next few years.

New Zealand Economic Growth

Economic momentum is expected to ease over the short-term, as tailwinds to growth look less synchronized. Household spending growth is likely to moderate due to a fall in immigration, at a time when the economy nears full-employment—although low inflation should cushion it somewhat. In addition, fixed investment is seen slowing due to tighter financial conditions, amid upcoming changes to bank capital requirements. Moreover, exports should also lose steam in the near-term, as a slower Chinese economy could put a dampener on demand for dairy products, New Zealand’s main export. Met the why particular panelists expect the economy to expand 2.7% in 2019, which is unchanged from last month’s forecast, and 2.5% in 2020.

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New Zealand Facts

Bond Yield2.111.20 %Mar 11
Exchange Rate0.68-1.69 %Mar 11
Stock Market4,1560.11 %Mar 11

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