New Zealand Economic Forecast

New Zealand Economic Outlook

August 20, 2019

The economy seems to have remained on an even keel following the first quarter’s relatively soft outturn, when a cooling services sector offset solid expansions across the manufacturing and construction sectors. On the one hand, unemployment fell to a 11-year low in Q2, while average consumer confidence was slightly more upbeat and the kiwi was relatively strong in the same period. This suggests consumer demand was healthy in Q2, further reflected by robust electronic card transactions growth in the quarter. On the other hand, downbeat business sentiment, which remained deeply entrenched in pessimistic territory in Q2, boded ill for investment activity growth, while merchandise export growth slowed amid ongoing global trade spats. Turning to the second half of the year, the Central Bank’s aggressive rate cut in August should bolster growth ahead.

New Zealand Economic Growth

Growth is expected to slow this year as feeble business confidence curbs investment activity and household spending growth continues to lose momentum. Nevertheless, a more expansionary fiscal and monetary policy should cushion the overall slowdown. Meanwhile, escalating global trade tensions and weaker growth in Australia and China cloud external sectors outlook. FocusEconomics panelists expect the economy to expand 2.5% in 2019, which is unchanged from last month’s forecast, and 2.5% again in 2020.

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New Zealand Facts

Bond Yield1.471.20 %Jul 31
Exchange Rate0.66-1.69 %Jul 31
Stock Market4,7330.11 %Jul 31

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