Upcoming GDP figures are expected to show that economic growth in New Zealand remains sluggish, but didn't continue slowing in the second quarter of this year. However, with the global backdrop looking increasingly rocky and business conditions weak, the risks for growth over the remainder of 2019 are to the downside. Against this backdrop, the RBNZ is likely to cut the cash rate again later this year in order to boost demand.

 

Soggy but steady growth...

We expect that the upcoming GDP report (out on 19 September) will show that the New Zealand economy expanded by 0.6% in the June quarter, matching the pace of growth seen in the previous two quarters. That wouldn't be a great result, but it would at least suggest that there hasn't been a further deceleration so far this year.

Underlying our expectations for a moderate rise in overall activity are some mixed conditions across the economy. On the upside, we've seen some better conditions in a number of service sectors after softness earlier in the year. We also expect a boost from the agricultural sector, led by a 4% rise in dairy production. Balanced against those developments, construction, mining and food manufacturing all eased back over the quarter

 

....as headwinds continue to build

While GDP growth appears to have held up in the June quarter, stepping back and taking a longer term look at economic activity, it's clear that the wind has come out of New Zealand's sails. Annual GDP growth appears to have slowed from rates of 3 to 4% in recent years down to just 2.5% now. And looking to the back half of the year, the risks for growth are to the downside.

Download The Full Weekly Commentary

All information contained on this website is given in good faith and has been derived from sources believed to be accurate. However, the information is selective and neither Westpac nor any other company in the Westpac Group have verified the information, which may not be complete or accurate for your purposes. Those companies make no representation or warranty of any kind as to the accuracy or completeness of the information. It is general information only and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. Neither Westpac nor any other company in the Westpac Group nor any of their directors, employees and associates guarantees the security of this website, gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way including by reason of negligence for, errors in, or omissions from, the information on this website and does not accept any liability for any loss or damage, however caused, as a result of any person relying on any information on the website or being unable to access this website. This disclaimer is subject to any applicable contrary provisions of the Australian Securities and Investments Commission Act and Trade Practices Act.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD at daily lows, dragged by Sterling

Turmoil around Brexit and the absence of any other relevant catalyst weighs on the common currency, EUR/USD battling with 1.1120.

EUR/USD News

GBP/USD loses 1.2900 as Parliament says “NO”

The UK Parliament has rejected PM Johnson’s time table, lifting odds of an upcoming election in the kingdom. Volatile trading ahead of more clarity as the drama continues.

GBP/USD News

USD/JPY holds steady above mid-108.00s

The USD/JPY pair failed to capitalize on the early uptick to multi-day tops and is currently placed at the lower end of its daily trading range, just above mid-108.00s.

USD/JPY News

Top 3 price prediction BTC, ETH, XRP: CFTC takes a surprisingly bold step to move cryptos forward

The CFTC is open to Ethereum futures without anyone picking-up the ball. XRP is currently the only bullish option currently in the Top Three. Current volatility levels have last been seen in May.

Read more

Gold heads higher as Brexit uncertainty prevails over trade-deal hopes

In the final hour of trade on Wall Street, spot gold was moving in on the 1490 level, trading higher by 0.22% having travelled between a low of $1480.91 and a high of $1489.04.

Gold News

Forex Majors

Cryptocurrencies

Signatures