New Zealand Economic Forecast

New Zealand Economic Outlook

September 18, 2018

Although national accounts data is yet to be released, available indicators point to stronger quarter-on-quarter growth in Q2 following Q1’s over one-year low. Despite the unemployment rate ticking up in Q2, the labor market remains in robust shape. This, coupled with signs that wage growth is gradually picking up allude to solid private consumption activity, as evidenced by the quicker pace of expansion of retail sales in the quarter. Furthermore, construction activity rebounded strongly in Q2, led by a marked increase in building work of non-residential buildings. On the external front, thanks to higher commodity prices and solid services exports, particularly from tourism and spending by international students, the external sector is likely to drag less on overall growth compared to the previous quarter. Meanwhile, data for the third quarter has been mixed so far. Electronic card transactions grew at a healthy monthly rate in July and August, pointing to resilient consumer spending. On the other hand, business confidence continued to fall sharply, reaching an over one-decade low in August.

New Zealand Economic Growth

Robust growth is expected to carry over into next year. The economy should be buoyed by favorable monetary conditions, a strong job market and increased government spending. Heavy reliance of exports on the Chinese market, however, represents a key downside risk as a slowdown of activity or a weaker yuan could dent external sector performance. Met the why particular panelists expect the economy to expand 2.7% in 2018 and 2.7% again in 2019, unchanged from last month’s forecast.

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New Zealand Facts

Bond Yield2.691.20 %Sep 24
Exchange Rate0.66-1.69 %Sep 24
Stock Market4,1750.11 %Sep 24

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