New Zealand Economic Forecast

New Zealand Economic Outlook

May 21, 2019

The economy seems to have sustained its momentum in the first quarter even though tailwinds to growth have softened. Domestically, lower electronic card transactions and a dip in employment growth point to more moderate household spending. Fixed investment, on the other hand, likely held up, supported by upbeat construction activity as reflected by rising building consent issues in Q1. On the external front, export growth was probably restrained by waning tourist arrivals, which recorded the slowest expansion in six years owing to a fall in Chinese visitors. Turning to Q2, domestic activity looks somewhat brighter: Electronic card transactions accelerated in April, which, coupled with upbeat consumer sentiment, suggest that spending may strengthen ahead. In addition, investment should get a boost going forward after the ruling Labour party rolled back its planned capital gains tax on 17 April, amid growing opposition.

New Zealand Economic Growth

Growth is projected to soften this year. Despite a tight labor market, subdued wage growth will eat into household spending. In addition, low investment intentions by firms will likely weigh on fixed investment, even as the recent cut to the official cash rate should give it a slight push. Lastly, escalating trade tensions threaten external demand from China, a key trading partner. Met the why particular panelists expect the economy to expand 2.5% in 2019, which is down 0.1 percentage points from last month’s forecast, and again 2.5% in 2020.

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New Zealand Facts

Bond Yield1.711.20 %Jun 13
Exchange Rate0.66-1.69 %Jun 13
Stock Market4,4610.11 %Jun 13

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