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NEW ZEALAND: Q2 GDP Widely Expected To Contract But Significant Uncertainties

NEW ZEALAND
APACNew ZealandBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Q2 GDP prints on Thursday and Bloomberg consensus and NZ Treasury both expect it to post a 0.4% q/q decline resulting in the economy contracting 0.6% y/y. It rose 0.2% q/q and 0.3% y/y in Q1. The RBNZ’s August forecast was slightly weaker at -0.5% q/q with Q3 also negative. Treasury noted this week that there were few signs of recovery in Q3. Thus we expect the RBNZ to cut rates 25bp at its October and November meetings.

  • All of the 15 analysts on Bloomberg expect the economy to contract with the range of forecasts between -0.1% and -0.4% q/q. The annual growth rate is projected to be between +0.2% and -0.7%.
  • Of the major local banks BNZ, Westpac and Kiwibank are all in line with consensus, while ANZ expects only a 0.1% q/q decline and ASB -0.3% q/q.
  • ANZ said that its forecast is still weak and a GDP print around this point wouldn’t derail the RBNZ from cutting rates further this year, but it believes the “partial industry-level data” released in recent weeks doesn’t signal that the economy is as weak as the high-frequency data published before the August RBNZ meeting implied.
  • BNZ expects that private consumption fell in Q2 and that Q1 is likely to be revised down. It also believes investment will be flat and net exports will be a drag on growth. It says that the width of the error band around its consensus forecast is particularly wide this quarter.
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Q2 GDP prints on Thursday and Bloomberg consensus and NZ Treasury both expect it to post a 0.4% q/q decline resulting in the economy contracting 0.6% y/y. It rose 0.2% q/q and 0.3% y/y in Q1. The RBNZ’s August forecast was slightly weaker at -0.5% q/q with Q3 also negative. Treasury noted this week that there were few signs of recovery in Q3. Thus we expect the RBNZ to cut rates 25bp at its October and November meetings.

  • All of the 15 analysts on Bloomberg expect the economy to contract with the range of forecasts between -0.1% and -0.4% q/q. The annual growth rate is projected to be between +0.2% and -0.7%.
  • Of the major local banks BNZ, Westpac and Kiwibank are all in line with consensus, while ANZ expects only a 0.1% q/q decline and ASB -0.3% q/q.
  • ANZ said that its forecast is still weak and a GDP print around this point wouldn’t derail the RBNZ from cutting rates further this year, but it believes the “partial industry-level data” released in recent weeks doesn’t signal that the economy is as weak as the high-frequency data published before the August RBNZ meeting implied.
  • BNZ expects that private consumption fell in Q2 and that Q1 is likely to be revised down. It also believes investment will be flat and net exports will be a drag on growth. It says that the width of the error band around its consensus forecast is particularly wide this quarter.