New Zealand Economic Forecast

New Zealand Economic Outlook

January 23, 2018

The economy slowed in the third quarter according to recent figures. Growth was dragged down by a weak agricultural sector, although construction grew strongly thanks to greater investment in infrastructure and residential housing. Historical GDP growth was also revised upwards significantly, suggesting that the economy was more productive in recent years than previously thought. Indicators for Q4 were mixed: in December, business confidence remained deep in negative territory, while consumer confidence was robust despite moderating. However, very dry conditions in several areas of the country likely hampered agricultural production in the quarter. The new government is currently working on measures as part of its 100-day plan. Student aid was increased from the start of the year; the minimum wage is set to rise by close to 5% from 1 April; and a law to limit foreign property buyers is currently in parliament. In mid-December, the budget policy statement announced the new administration’s intention to boost spending on health, education and conservation as part of the 2018 budget, to be released later this year.

New Zealand Economic Growth

Going forward, the economy should be supported by looser fiscal policy and low interest rates. However, a likely slowdown in the housing market will drag on private consumption. In addition, pessimistic business sentiment also risks dampening investment and job creation. Panelists surveyed this month by FocusEconomics expect the economy to expand 2.9% in 2018, unchanged from last month’s forecast, and 2.6% in 2019.

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New Zealand Facts

Bond Yield2.961.20 %Feb 14
Exchange Rate0.74-1.69 %Feb 14
Stock Market3,6990.11 %Feb 14

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