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NEW ZEALAND: Economy Forecast To Have Developed As RBNZ Expected In Q4

NEW ZEALAND
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Q4 GDP prints on Thursday and Bloomberg consensus is forecasting the production-based measure to rise 0.4% q/q but still be down 1.4% y/y after falling 1.0% q/q & 1.5% y/y the previous quarter. The RBNZ’s February projection is slightly lower at 0.3% q/q but the annual rate is in line with consensus. With the economy developing broadly in line as it expects, it is likely to cut rates 25bp at each of the April and May meetings.

  • Forecasts are in a wide range between +0.2% q/q and +1.3% q/q but most are around 0.3-0.5% q/q.
  • ANZ is in line with consensus and ASB & Kiwibank with the RBNZ. BNZ is less optimistic forecasting a rise of 0.2% q/q resulting in an annual decline of 1.5%. Westpac is more optimistic projecting a 0.5% q/q increase and a 1.3% y/y fall, but this is due to seasonal adjustment and its other calculations imply that there was no sectoral growth in Q4.
  • Expenditure-based GDP fell 0.8% q/q and 1.1% y/y in Q3 and the RBNZ expects it to rise only 0.2% q/q in Q4 to be down 0.9% y/y.
  • Q4 data showed a solid rise in manufacturing volumes (+1.1% q/q) and real retail sales (+0.9% q/q). Building volumes were very weak contracting 4.4% q/q as the construction sector continues to struggle. There could be a positive contribution from net exports though as export volumes rose 1.3% q/q and imports fell 1.7% q/q. 
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Q4 GDP prints on Thursday and Bloomberg consensus is forecasting the production-based measure to rise 0.4% q/q but still be down 1.4% y/y after falling 1.0% q/q & 1.5% y/y the previous quarter. The RBNZ’s February projection is slightly lower at 0.3% q/q but the annual rate is in line with consensus. With the economy developing broadly in line as it expects, it is likely to cut rates 25bp at each of the April and May meetings.

  • Forecasts are in a wide range between +0.2% q/q and +1.3% q/q but most are around 0.3-0.5% q/q.
  • ANZ is in line with consensus and ASB & Kiwibank with the RBNZ. BNZ is less optimistic forecasting a rise of 0.2% q/q resulting in an annual decline of 1.5%. Westpac is more optimistic projecting a 0.5% q/q increase and a 1.3% y/y fall, but this is due to seasonal adjustment and its other calculations imply that there was no sectoral growth in Q4.
  • Expenditure-based GDP fell 0.8% q/q and 1.1% y/y in Q3 and the RBNZ expects it to rise only 0.2% q/q in Q4 to be down 0.9% y/y.
  • Q4 data showed a solid rise in manufacturing volumes (+1.1% q/q) and real retail sales (+0.9% q/q). Building volumes were very weak contracting 4.4% q/q as the construction sector continues to struggle. There could be a positive contribution from net exports though as export volumes rose 1.3% q/q and imports fell 1.7% q/q.