NZ: Weaker Q3 GDP data - ANZ

Analysts at ANZ point out that the NZ economy expanded 0.3% q/q in Q3, weaker than both market (0.6%) and ANZ’s own expectations (0.5%), thereby resulting in moderation of annual growth to 2.6% from an upwardly revised 3.2% in Q2.

Key Quotes

“This is the weakest quarterly pace of growth since Q4 2013.”

“Data revisions (as part of Statistics NZ’s annual benchmarking methodology) saw historical GDP growth revised a little lower in the year to March 2017 (from 3.7% to 3.6%) but higher in the year to March 2018 (from 2.7% to 3.1%). On balance, this paints a slightly stronger picture of the economy’s performance in recent years.”

“All up, we expect growth can continue to muddle along at an annual pace of 2½-3%, as a number of economic headwinds and tailwinds play out. This would be a touch shy of where we see trend growth, suggesting it will be a struggle for core inflation to lift sustainably to the RBNZ’s 2% target.”