New Zealand Gross Domestic Product Preview Third Quarter: Improvement in the Pacific Basin

  • GDP expected to improve in the third quarter.
  • Housing, retail sales and manufacturing anticipate a stronger economy.
  • RBNZ November rate hold supported by better growth.

Statistics New Zealand will release the third quarter GDP data at 21:45 GMT, 16:45 EST on Wednesday December 18th.


Gross domestic product is estimated to rise 2.4% year-to-year in the third quarter from 2.1% in the second. On a quarterly basis GDP is forecast to increase 0.6%, up from 0.5% in the second quarter.

New Zealand Economy

Recent data in retails sales and manufacturing coupled with a good performance in the housing sector and rising consumer confidence will return the New Zealand growth rate to the 2.4% and 2.5% range of the last quarter of 2018 and the first of this year.  The second quarter pace of 2.1% was the lowest in five years ,since the economy grew just 1.8% in the final three months of 2013.

The Westpac consumer confidence index jumped to 109.9 in the fourth quarter from 103.1 in the second. It was the highest reading since the first three months of last year.


Global risks earlier in the year and falling domestic sentiment for consumers and businesses had elicited a 0.25% rate cut in May to 1.5% from the RBNZ and a surprise 0.5% cut in August to 1.0%.  Analysts had expected a 0.25% reduction in August.   The bank refrained from a further reduction in November though one had been widely forecast.

The anticipated better growth in the third quarter will likely aid the RBNZ’s case that it has provided sufficient support for the New Zealand economy.


The New Zealand dollar has been the best performing Asian currency in the fourth quarter.  From its open on October 1st at 0.6262 the NZD has gained 5.0% against the US dollar the close on December 17th at 0.6574.  

With the US-China trade dispute seemingly headed for partial resolution, the potential for higher GDP growth around the Pacific Basin and the fundamental logic for a higher kiwi is strong.  A better than expected third quarter GDP would cement that view.

Against this idea the technical signs are indicating fatigue with the rally. The upper border of the upward channel that extends back to the beginning of October was breached earlier this month and the dollar has fallen back into the channel, hinting at further losses. The RSI index is also showing a markedly over bought position.

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