New Zealand Economic Forecast

New Zealand Economic Outlook

February 25, 2020

Momentum seems to have broadly kept pace in the final quarter of 2019 and at the outset of 2020. This follows the third quarter’s acceleration, which was powered by soaring consumer spending on the back of lower interest rates. A sizable improvement in business confidence and conditions suggests private sector activity firmed up in Q4, while a dip in the unemployment rate, robust wage growth and more upbeat consumer sentiment point to healthy consumer spending in the quarter. Turning to the first month of this year, although sustained consumer optimism and healthy yearly growth in card transactions hint that household spending remained resilient at the beginning of 2020, momentum has likely cooled as spillovers from coronavirus have taken a toll on the external sector. Meanwhile, on the political front, recent polls project a neck-and-neck electoral race between Prime Minister Jacinda Ardern’s center-left bloc and the opposition National Party ahead of this summer’s general election.

New Zealand Economic Growth

Growth is expected to remain stable this year. A tight labor market and sustained wage growth should support household spending which, together with more expansionary fiscal and monetary stances, will spur domestic demand. That said, economic weakness in China and Australia will weigh on the external sector, which is also exposed to downside risks from an intensification of trade tensions and the coronavirus. FocusEconomics panelists project the economy to expand 2.3% in 2020, which is unchanged from last month’s estimate, and 2.4% in 2021.

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New Zealand Facts

Value Change Date
Bond Yield1.671.20 %Dec 30
Exchange Rate0.67-1.69 %Jan 01

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New Zealand Economic News

  • New Zealand: RBNZ on hold in February

    February 12, 2020

    On 12 February, the Reserve Bank of New Zealand (RBNZ) kept the official cash rate (OCR) unchanged.

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  • New Zealand: Unemployment rate unexpectedly dips in Q4

    February 5, 2020

    The seasonally-adjusted unemployment rate slip to 4.0% in Q4 from a revised 4.1% the previous quarter (previously reported: 4.2%).

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  • New Zealand: Consumers start 2020 on a positive note

    February 5, 2020

    The ANZ-Roy Morgan consumer confidence indicator dipped to 122.7 in January from December’s almost two-year high of 123.3, remaining comfortably above the 100-threshold that separates optimism from pessimism among consumers. Consumers had a worse assessment about their current financial situation compared to one year ago and their five-year general economic outlook was somewhat less upbeat.

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  • New Zealand: Inflation accelerates in Q4

    January 24, 2020

    Consumer prices increased 0.5% in Q4 2019 over the previous quarter, down slightly from Q3’s 0.7% rise but beating analysts’ expectations of a 0.4% increase, according to Statistics New Zealand.

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  • New Zealand: Consumers close 2019 on a high note

    December 20, 2019

    The ANZ-Roy Morgan consumer confidence indicator rose to 123.3 in December (November: 120.7), moving further above the 100-threshold that separates optimism from pessimism among consumers and printing the best result since March 2018. Consumers grew more optimistic about their future personal finances and they had better assessments about their current financial situation compared to one year ago.

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