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Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

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The NZ economy in four charts

Written by ANZ Bluenotes on February 9th, 2018.      0 comments

Seasonally adjusted merchandise exports


Source: Statistics NZ, ANZ Research

However, the abrupt moderation in the housing market suggests the economy is about to screech to a halt. 

“[NZ] merchandise exports in December were spectacular.”

But this time is, in fact, different – the slowdown has been caused by Reserve Bank macro-prudential policy restricting credit availability, not higher interest rates.

Real GDP growth and house price inflation

Source: Statistics NZ, REINZ, ANZ Research


The fact consumer confidence is holding up well suggests housing won’t be quite the headwind for growth the above chart would suggest.

We’re also discounting the fall in the activity outlook in our business confidence survey to some extent for now.

Anecdote suggests it might continue to bounce back as uncertainty related to the unexpected election result wanes. We are assuming any near-term growth wobble won’t be long-lasting.

ANZ Business Outlook Own Activity Index & ANZ Roy Morgan Consumer Confidence

Source: ANZ, Roy Morgan

Nonetheless, with net migration looking like it has topped out, labour force participation at a record high, and workers already working long hours, New Zealand will need a rapid productivity turnaround if recent growth rates are to be maintained.

Growth at par would actually be a pretty solid outcome given we are nine years into an economic expansion with signs of capacity pressure evident, particularly in the construction sector but also more broadly.

Fortunately for heavily indebted households, the feed-through into inflation seems to have broken down, so we see the Reserve Bank on hold until the second half of next year.

Non-tradable inflation versus capacity measures


Source: NZIER, Statistics NZ, ANZ Research

Sharon Zollner is Chief Economist at ANZ NZ



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