New Zealand Economic Forecast

New Zealand Economic Outlook

October 15, 2019

Growth weakened slightly in Q2, as a downturn in construction weighed on fixed investment. A pick-up in private consumption, amid falling unemployment and ultra-loose monetary conditions, cushioned the deceleration, however. Turning to Q3, a slowdown in credit-card transactions, coupled with a continued slide in consumer confidence, suggests household spending eased. Moreover, business confidence turned markedly more pessimistic, tumbling to an over 11-year low in September, while the PMI slipped into contractionary territory in the quarter, hinting at dimmer prospects for private sector activity. On the upside, the Treasury posted an NZD 7.5 billion surplus in FY 2019, the biggest in 11 years. While higher-than-expected corporate profits, employment gains and wage growth have boosted the government’s coffers, the sizeable surplus also reflects one-time factors, including NZD 2 billion from the revaluation of rail assets.

New Zealand Economic Growth

The economy should keep pace next year. Domestic demand is poised to strengthen on a looser fiscal stance and accommodative monetary conditions. That said, fixed investment and the external sector are set for a slowdown. Downside risks include weaker-than-expected performances in China and Australia, as well as a resurgence of global trade wars. FocusEconomics panelists expect the economy to expand 2.4% in 2020, which is down 0.1 percentage points from last month’s estimate, and 2.5% in 2021.

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New Zealand Facts

Bond Yield1.061.20 %Sep 04
Exchange Rate0.64-1.69 %Sep 04
Stock Market4,7780.11 %Sep 04

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