New Zealand GDP beats estimate, falls 12.2 percent in the second quarter

New Zealand's gross domestic product fell a seasonally adjusted 12.2 percent in the second quarter, data showed on Thursday.

• GDP prod based (QoQ) sa (q2): -12.2% (est -12.8%, prev -1.6%).
• GDP prod based (YoY) sa (q2): -12.4% (est -13.3%, prev -0.2%).
• Annual average prod-based GDP -2.0 pct in second qtr vs year ago (Reuters poll -2.3 pct).
• Q2 s/adj expenditure-based GDP -9.8 pct on pvs quarter (Reuters poll -13.0 pct).

The NZD has hardly flinched on the data, trading at 0.6734 in a narrow 0.6724/38 range for Asia so far. 

The data was widely expected to be poor given the worst of COVID disruption hit at this time, and after all, it is backwards looking. 

Likewise, policymakers will look through the data, which means it will not have any bearing on the RBNZ’s deliberations as it heads into the MPR next week.

The RBNZ’s “least regrets” strategy will not change. The Committee is likely to emphasise that preparations to deploy a negative OCR and Funding for Lending Programme are well underway; they could also flex tactical LSAP purchases to get more traction on the NZGB curve,

analysts at ANZ bank explained.

Description of GDP

The Gross Domestic Product released by the Statistics New Zealand is a measure of the total value of all goods and services produced by New Zealand. The GDP is considered as a broad measure of New Zealand economic activity and health. Generally speaking, a high reading is seen as positive (or bullish) for the NZD, while a falling trend is seen as negative (or bearish) for the NZD.