Q3 NZ GDP Forecast To Post Small Rise, Revisions Cloud Outcome

On Wednesday Q3 NZ GDP prints and Bloomberg consensus expects it to rise 0.2% q/q to be up 0.5% y/y but there is a wide range of forecasts of -0.5% to +0.5% q/q. The RBNZ had a slightly stronger 0.3% q/q rise in its updated November forecasts. Either way it is likely to show that GDP per person declined given the 128.6k rise in net migration in the 12 months to September.

• Q3 data released to date is signalling weak growth with building activity down 2.4% q/q, manufacturing volumes -2.7% q/q and real retail sales flat. Today’s current account data is implying a small net export detraction.
• Of the local banks ASB and Kiwibank are in line with consensus, Westpac is forecasting a 0.1% q/q drop, BNZ a flat outcome and ANZ a stronger 0.3%.
• ASB notes that no sector is looking strong with goods weak and services “slightly better”, though they warn to watch for components, such as residential construction, that are impacted by a higher population given the RBNZ’s concern re its inflationary impact. Westpac points to weak manufacturing and agriculture for the reason for its negative forecast but says that stronger public demand and services should provide some offset.
• ASB points out that there will be revisions from methodology and benchmarking changes but the most recent quarters are unlikely to be significantly impacted and they are the ones that are important to the RBNZ’s assessment of the strength of the economy. Westpac has said “Statistics NZ have indicated that the net impact of these revisions is to lower annual average GDP growth by 0.5ppts in the year to March 2022 and to raise annual average growth by 0.1ppts in the year to March 2023.”