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18 Sep 2014
NZ Q2 GDP expected to show slowdown - BNZ
FXStreet (Bali) - Economists at Bank of New Zealand expect Thursday’s Q2 GDP report, due at 22.45 GMT, to show a slowdown in economic growth.
Key Quotes
"We expect Thursday’s Q2 GDP report to show a slowdown in economic growth. Presuming we’re right, it is likely to be mainly a timing issue rather than anything “real”. There are some early signs that growth will be stronger in Q3 than in Q2. Not any genuine slowdown that we can see, as yet."
"In terms of the numbers, we expect a 0.5% gain in Q2 GDP. This compares to market expectations of 0.6%. Our estimate is restrained mostly by a fall in primary sector production, which adds to weakness in manufacturing via food processing. On the expenditure side, goods exports are for us the principal drag. While 0.5% would be slower than Q1’s 1.0% it would be enough to hold annual growth at a respectable 3.7%, from 3.8%."
"Still, this would not be up to the mark as far as the latest Monetary Policy Statement is concerned. It estimated a 0.8% increase for Q2 GDP. While this was put to bed before the poor June quarter manufacturing figures came to light, it also preceded the solid construction and wholesaling data for the quarter. So it’s not clear that the Bank, even now, would be expecting a number substantially slower than 0.8%."
"The real issue, though, is whether GDP growth slows as much as the Reserve Bank expects by the start of next year, on its way to below-trend growth in 2016. While this is looking more “achievable” now – indeed is becoming the consensus call – nothing can be taken for granted. As the September MPS’s refrain from scenario analysis alluded to, there is a lot that could shunt things around over the coming year or two. For the meantime, though, there seems a window to sit and watch."
"Just on GDP, be aware there are some major revisions coming with release of the September quarter accounts (due for release 18 December). This has the potential to paint a different picture on New Zealand’s recent historical economic performance. "
Key Quotes
"We expect Thursday’s Q2 GDP report to show a slowdown in economic growth. Presuming we’re right, it is likely to be mainly a timing issue rather than anything “real”. There are some early signs that growth will be stronger in Q3 than in Q2. Not any genuine slowdown that we can see, as yet."
"In terms of the numbers, we expect a 0.5% gain in Q2 GDP. This compares to market expectations of 0.6%. Our estimate is restrained mostly by a fall in primary sector production, which adds to weakness in manufacturing via food processing. On the expenditure side, goods exports are for us the principal drag. While 0.5% would be slower than Q1’s 1.0% it would be enough to hold annual growth at a respectable 3.7%, from 3.8%."
"Still, this would not be up to the mark as far as the latest Monetary Policy Statement is concerned. It estimated a 0.8% increase for Q2 GDP. While this was put to bed before the poor June quarter manufacturing figures came to light, it also preceded the solid construction and wholesaling data for the quarter. So it’s not clear that the Bank, even now, would be expecting a number substantially slower than 0.8%."
"The real issue, though, is whether GDP growth slows as much as the Reserve Bank expects by the start of next year, on its way to below-trend growth in 2016. While this is looking more “achievable” now – indeed is becoming the consensus call – nothing can be taken for granted. As the September MPS’s refrain from scenario analysis alluded to, there is a lot that could shunt things around over the coming year or two. For the meantime, though, there seems a window to sit and watch."
"Just on GDP, be aware there are some major revisions coming with release of the September quarter accounts (due for release 18 December). This has the potential to paint a different picture on New Zealand’s recent historical economic performance. "