NZ: Much stronger assessment of GDP - BNZ

Craig Ebert, Senior Economist at BNZ, suggests that for NZ economy Thursday’s September quarter GDP report will be on top of pile of economic releases and they expect this to show an economy still expanding reasonably well in real terms, even with the knife-edge election coming into the frame.

Key Quotes

“Specifically we anticipate a 0.7% gain in the quarter and 2.5% in annual growth terms. This is aided by renewed expansion in construction activity, ongoing robustness in service sector growth, while rural output was probably compromised by the wet weather (as it was back then, before it got very dry in November).”

“The market’s median expectation for Q3 GDP growth is 0.6%. However, it’s interesting that the other main local banks are, to a tee, picking 0.4%, whereas the overseas based analysts are more like 0.6/0.7%.”

“For the record, the Reserve Bank had in its November MPS an expectation that September quarter GDP would expand 0.7% (the same as us), while the NZ Treasury, as per last week’s Half-Year Economic and Fiscal Update (HYEFU), anticipated 0.6%.”

“If Q3 GDP does print in the vicinity of market expectations there will no doubt be the ongoing criticism that New Zealand’s economic growth is not that good in per capita, or productivity, terms. While this is a valid debate, we have also long noted the pitfalls in inferring such things by way of crude macro-economic variables, especially initial estimates of such.”