NZ: Difficult for the economy to grow above trend - ANZ
|Analysts at ANZ note that for the NZ economy, conditions for business investment are challenging, despite very apparent capacity constraints.
Key Quotes
“We expect to see softness in investment (excluding residential buildings) in the short term, given current challenges. These include profit squeeze, low confidence, reduced risk tolerance, and credit constraints. That said, we believe conditions are in place to see a recovery in investment over the medium term, particularly given the rising cost of labour.”
“There are a number of offsetting forces at play, posing risks on both sides of this outlook. Downside risks have been tempered somewhat recently, given evident resilience in the economy. Yet even with this expected recovery, we anticipate that below-average growth will continue, in light of persistent headwinds. This reinforces our view that it may be difficult for the economy to grow above trend.”
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