MNI DATA IMPACT. NZ Q3 GDP Meets Forecasts, Though Y/Y Lower

By Lachlan Colquhoun

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

released Thursday. Here are five things of interest in the release by Statistics

New Zealand.

Q4 result meets market expectations, falls short of RBNZ. 

The NZ economy grew by 0.6% in Q4, 2018, recovering from a disappointing 0.3%

rise in Q3. The result was in line with market expectations but below the 0.8 %

forecast by the RBNZ. The figure for Y/Y growth was 2.3%, against 2.6% at the

end of Q3. According to Stats NZ, 2018 calendar year growth stood at 2.8%.

Implications for RBNZ policy. 

The RBNZ estimate of 3.0% growth for 2019 may not be achieved, despite the low

unemployment rate of 4.3%. RBNZ monetary policy is currently balanced, but

today's result gives no clear direction on the next move in interest rates,

which are likely to stay at the current 1.75% for the duration of 2019. The Bank

will meet next week to discuss interest rates, and is expected to leave them

unchanged.

Strong consumption. 

Growth was driven by a 0.9% quarterly increase in service industries, with

retail and accommodation leading the way with a 2.5% increase. Market indicators

show that business confidence is low, but NZ consumers are increasing spending

in restaurants and hotels. Ten of the 16 industries monitored by Statistics NZ

recorded growth over the quarter.

No per capital recession. 

Unlike neighbouring Australia, where per capital GDP has fallen for two

consecutive quarters, creating a so-called "per capita recession", NZ has

avoided this phenomenon. After falling 0.1% in Q3, the figure grew 0.1% in Q4.

Primary industries weaker. 

Primary industries comprise 7% of the NZ economy, but the overall sector fell by

0.7% over the quarter. Within this category, the biggest falls were recorded by

forestry industries, down 1.7%, and agriculture down 1.3%.

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

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