MNI 5 THINGS. NZ Q4 GDP Growth Seen Higher Q/Q, Y/Y Could Slow

By Lachlan Colquhoun

     SYDNEY (MNI) - New Zealand GDP data for the fourth quarter of 2018 will be

released Thursday. Here are five things to look for in the release from

Statistics NZ.

Q/Q result expected to bounce back, Y/Y uncertain. 

GDP growth for the third quarter of 2018 was a disappointing 0.3%, delivering an

annualised 2.6%. While a Q4 result of 0.6% is expected, some analysts are

forecasting a lower result which, though higher than Q3, could deliver a lower

Y/Y number.

Treasury Forecast. 

The NZ Treasury is expecting Q4 growth of 0.6%, which would deliver annualised

growth of 2.7%, down from 3.0% annualised seen in Q4 and a significant decline

from the 3.9% posted in 2016.

Implications for RBNZ policy. 

A low growth figure tomorrow would confirm the economy is flatlining and suggest

that the RBNZ estimate of 3.0% growth for 2019 is overly optimistic, despite a

decade low unemployment rate of 3.9%. The RBNZ's monetary policy is currently

balanced, but a slowing economy increases the chance of a rate cut in the longer

term, perhaps in 2020.

Economists' consensus sees slowdown by 2021. 

A quarterly survey of economists at the NZ Institute of Economic Research has

revised longer term growth downwards. The survey forecasts GDP peaking at 2.9%

for the year to March 2021 before moderating to 2.5% in the following year.

Wages outlook. 

Like its counterpart in Australia, the RBNZ is focussing on wages growth to

drive consumption and growth. A disappointing result would suggest that the

economy is encountering headwinds which will be reflected in the labour market

later this year.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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