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NZ: Weakness likely to be temporary - Westpac

Michael Gordon, senior economist at Westpac, points out that the New Zealand’s GDP rose 0.3% in the September quarter, but suggests that some of this weakness is likely to be temporary, and revisions to GDP history show more momentum in the economy than previously thought.

Key Quotes

“The surprise weakness in the latest quarter is softened somewhat by some upward revisions to the GDP history, which show that the growth slowdown over the last couple of years has been more modest than thought. Growth over the 2017 calendar year is now reported as 3.1%, compared to 2.8% previously.”

“Latest result has mixed implications for the Reserve Bank. While the quarterly result was well below forecast, the upward revisions to history mean that GDP is still running at a higher level than expected. It’s not immediately clear what this implies for the economy’s potential output, and the extent of inflationary pressures. Our view remains that the Reserve Bank will keep the OCR on hold for an extended period.”

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