New Zealand Economic Forecast

New Zealand Economic Outlook

November 17, 2020

The economy likely recovered in Q3 and conditions remain upbeat in Q4. Electronic card transactions rose notably in Q3, which, coupled with higher consumer confidence, points to stronger household spending, although a jump in the unemployment rate calls for caution. Similarly, improved business sentiment suggests that private sector activity bounced back in Q3. Moving to Q4, rising business and consumer confidence in October bodes well for activity. Meanwhile, Prime Minister Jacinda Ardern secured support from the Green Party for her next term in government. She named a new cabinet whose main focus will be on the economic recovery, as indicated by the appointment of Finance Minister Grant Robertson as deputy prime minister. The new government announced it will extend the small business loan scheme and boost funding for the flexi-wage job support program.

New Zealand Economic Growth

GDP should rebound in 2021, after diving this year. Resurgent investment activity and private consumption, helped by expansionary fiscal and monetary policies, will support domestic demand, and the gradual reopening of the global economy will boost the external sector. While further Covid-19 waves could restrain growth, the prospect of a vaccine bodes well for the outlook. FocusEconomics panelists project the economy to grow 4.5% in 2021, which is unchanged from last month’s estimate, and 2.9% in 2022.

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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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