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New Zealand Economic Forecast

New Zealand Economic Outlook

The economy returned to growth in Q2 on a seasonally adjusted quarter-on-quarter basis, following Q1’s flat reading. Available data suggests that momentum waned in the third quarter, restrained by tight financing conditions and a less supportive external environment. However, both business and consumer confidence averaged higher in the third quarter than in Q2. A jump in business confidence in October—potentially fueled in part by the victory of right-wing parties in 14 October elections—and a pickup in consumer sentiment in the same month bodes well for activity moving into Q4. In politics, final election results show that the center-right National Party will need the support of both populist party New Zealand First and the libertarian ACT party to form a government. Talks among the three parties are ongoing.

New Zealand Inflation

Inflation declined to 5.6% in Q3 from 6.0% in Q2. Therefore, price pressures remained entrenched above the Central Bank’s 1.0–3.0% target band. Inflation will ease from Q3 levels in 2024 due to a high base of comparison and the lagged effects of monetary policy tightening. The evolution of commodity prices is a factor to watch.

This chart displays Economic Growth (GDP, annual variation in %) for New Zealand from 2013 to 2022.

New Zealand Economic Data

2018 2019 2020 2021 2022
Population (million) 4.9 5.0 5.1 5.1 5.1
GDP (USD bn) 209 211 210 249 241
GDP per capita (USD) 42,684 42,245 41,224 48,804 47,074
GDP (NZD bn) 303 320 323 353 381
GDP per capita (NZD) 61,725 64,140 63,501 69,041 74,279
Economic Growth (Nominal GDP, ann. var. %) 5.6 5.7 1.0 9.3 7.9
Economic Growth (GDP, ann. var. %) 3.5 3.1 -1.5 6.0 2.7
Domestic Demand (ann. var. %) 5.2 3.2 -1.8 10.3 3.3
Private Consumption (ann. var. %) 4.6 3.2 -2.1 7.8 3.1
Government Consumption (ann. var. %) 3.4 4.7 7.1 8.2 4.6
Business Investment (ann. var. %) 8.0 5.1 -8.1 13.6 5.5
Residential Investment (ann. var. %) -1.6 5.3 -3.1 8.4 1.0
Fixed Investment (ann. var. %) 6.7 4.3 -4.6 12.4 4.1
Exports (G&S, ann. var. %) 3.1 2.6 -13.5 -2.4 0.2
Imports (G&S, ann. var. %) 6.9 2.3 -15.6 14.4 4.8
Manufacturing Production (ann. var. %) 1.9 1.1 -4.1 3.9 -5.3
Retail Sales (ann. var. %) 3.0 3.5 0.4 8.4 -0.4
Unemployment (% of active population, aop) 4.3 4.1 4.6 3.8 3.3
Fiscal Balance (% of GDP) 1.9 2.4 -7.3 -1.3 -2.7
Public Debt (% of GDP) 29.8 27.2 32.2 29.4 32.7
Money (ann. var. of M3 %) 6.4 4.7 12.2 7.1 1.8
Inflation (CPI, ann. var. %, eop) 1.9 1.9 1.4 5.9 7.2
Inflation (CPI, ann. var. %, aop) 1.6 1.6 1.7 3.9 7.2
Inflation (PPI, ann. var. %, aop) 3.4 2.1 1.0 4.6 8.3
Official Cash Rate (%, eop) 1.75 1.00 0.25 0.75 4.25
90-Day Bank Bill (%, eop) 1.98 1.23 0.26 0.91 4.53
10-Year Bond Yield (%, eop) 2.38 1.65 0.99 2.37 4.48
Stock Market (ann. var. of NZX %) 1.4 26.0 11.4 -2.9 -14.5
Exchange Rate (USD per NZD, eop) 0.67 0.67 0.72 0.68 0.63
Exchange Rate (USD per NZD, aop) 0.69 0.66 0.65 0.71 0.63
Current Account Balance (USD bn) -8.8 -5.9 -2.1 -14.5 -21.2
Current Account Balance (% of GDP) -4.2 -2.8 -1.0 -5.8 -8.8
Merchandise Trade Balance (USD bn) -4.3 -2.9 1.6 -5.0 -9.3
Foreign Direct Investment (USD bn) 2.3 4.3 3.9 4.0 7.5

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