New Zealand Economic Forecast

New Zealand Economic Outlook

July 17, 2018

The economy lost some momentum at the start of the year, with quarter-on-quarter GDP growth moderating to 0.5% in Q1, following 0.6% expansions in each of the previous two quarters. Growth came primarily on the back of the services sector, with the information and telecommunications industry contributing the most to the first-quarter expansion. Available data points to a continuation of relatively soft economic activity in Q2. Consumer confidence lost strength in the quarter, while debit and credit card spending fell, suggesting waning private consumption growth in Q2. Moreover, downbeat business sentiment persisted throughout the quarter, reflecting firms’ reduced employment and investment intentions. The external sector yielded more positive results, however, with the trade balance recording healthy surpluses in April–May as exports continue to benefit from solid Chinese demand.

New Zealand Economic Growth

Although the economy has lost some steam in recent months, growth is expected to remain robust going forward. Government plans to lift spending, an accommodative monetary policy stance, favorable export prices, and a tight labor market underpin the outlook. High levels of household debt remain a key downside risk, however, given the increased debt-service burden on borrowers if interest rates were to rise significantly. FocusEconomics panelists expect the economy to expand 2.7% in 2018, down 0.2 percentage points from last month’s forecast, and 2.7% again in 2019.

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New Zealand Facts

ValueChangeDate
Bond Yield2.911.20 %Jul 17
Exchange Rate0.68-1.69 %Jul 17
Stock Market4,0510.11 %Jul 17

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