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Westpac on today's HYEFU: "The..........>

NEW ZEALAND
NEW ZEALAND: Westpac on today's HYEFU: "The Treasury's real GDP growth forecasts
were previously at the top of the range, but with today's downward revisions are
now well within the pack (and in fact are a little below our forecasts in the
near term). Growth in consumer spending is expected to be subdued, despite
rising employment and a pickup in wage growth. In contrast, homebuilding and
business investment are expected to grow at a strong pace. The Treasury has made
no change to its assumptions about the scale and timing of the Kiwibuild
programme. While real GDP has been revised down, the inflation forecasts have
been increased. Previously the Treasury was expecting inflation to continue to
undershoot the 2% midpoint of the RBNZ's target range for several more years.
The latest inflation projections hold at 2% throughout the forecast period.
Notably, the Treasury has now fallen into line with the RBNZ's guidance on
interest rates: OCR hikes were previously expected by the end of this year, but
have now been pushed out to late 2020. Together, these forecast changes result
in little net change to the nominal GDP forecasts, and hence the projected tax
take."
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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