New Zealand Economic Forecast

New Zealand Economic Outlook

May 22, 2018

Recently released data suggests the modest economic performance recorded in Q4 likely persisted in Q1, with growth weighed down in part by a weak external sector. The trade deficit surged to the highest level in nearly a decade in Q1, driven by a sharp drop in key exports of dairy and meat products. On the domestic front, and despite the unemployment rate dipping to a near one-decade low in Q1, wage growth remains fairly muted and labor underutilization elevated, suggesting that slack in the labor market persists. On the political scene, the new coalition government released its 2018 budget on 17 May, without any major policy surprises. Core social services, particularly health and education, received the largest increases in funding. Fiscal surpluses were also projected for the next five years, which would enable the government to meet its self-imposed budget responsibility rules, including bringing public debt down to 20% of GDP by 2022.

New Zealand Economic Growth

Economic activity should remain robust this year, supported by low interest rates, healthy employment growth and higher public spending. A slowdown in demand from China poses the key downside risk to the outlook, given the country receives the largest share of New Zealand’s exports. Met the why particular panelists expect the economy to expand 2.9% in 2018, unchanged from last month’s forecast, and 2.7% in 2019.

New Zealand Economy Data

20132014201520162017
Population (million)4.54.64.64.74.8
GDP per capita (USD)41,74843,67737,29438,320-  
GDP (USD bn)187199173182-  
Economic Growth (GDP, annual variation in %)2.23.42.53.1-  
Consumption (annual variation in %)3.33.12.94.3-  
Investment (annual variation in %)8.08.42.25.5-  
Exports (G&S, annual variation in %)1.03.16.81.9-  
Imports (G&S, annual variation in %)6.47.93.64.2-  
Manufacturing (annual variation in %)0.61.81.51.9-  
Retail Sales (annual variation in %)4.14.55.94.9-  
Unemployment Rate5.85.45.45.1-  
Fiscal Balance (% of GDP)-1.9-1.10.30.9-  
Public Debt (% of GDP)33.233.131.931.1-  
Money (annual variation in %)15.611.314.22.1-  
Inflation Rate (CPI, annual variation in %, eop)1.60.80.11.3-  
Inflation Rate (CPI, annual variation in %)1.11.20.30.6-  
Inflation (PPI, annual variation in %)3.8-0.8-0.62.5-  
Policy Interest Rate (%)2.503.502.501.75-  
Stock Market (annual variation in %)11.512.68.54.5-  
Exchange Rate (vs USD)0.820.780.680.69-  
Exchange Rate (vs USD, aop)0.820.830.700.70-  
Current Account (% of GDP)-3.2-3.2-3.4-2.8-  
Current Account Balance (USD bn)-6.0-6.4-5.8-5.0-  
Trade Balance (USD billion)-0.3-1.0-2.5-2.2-  

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New Zealand Facts

ValueChangeDate
Bond Yield2.851.20 %May 21
Bond Yield2.851.20 %May 21
Exchange Rate0.69-1.69 %May 21
Exchange Rate0.69-1.69 %May 21
Stock Market3,9030.11 %May 21
Stock Market3,9030.11 %May 21

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