Analysts at ANZ suggest that their views on the New Zealand’s economic outlook have become more nuanced and while they retain a broadly constructive view of the medium-term growth picture, they have turned more circumspect near term, and see a heightened chance of a growth wobble (in fact they have cut our near-term GDP forecasts).
“That wobble is not expected to turn into something longer-lasting, but it certainly marks us out as less upbeat than the likes of the Treasury and RBNZ. Above-trend growth is hard to achieve when the most cyclical part of the economy (housing) looks set to remain soft. That has obvious implications for both the outlook for tax revenue and monetary policy, although the picture is complicated by inflation risks that are shifting higher.”
“Cost-push inflation, notably from the labour market, is something that policy makers will need to consider. It points to a shifting mix of monetary conditions (lower NZD/higher interest rates) going forward than would be the case otherwise. In data this week, housing market figures are likely to remain soft, while consumer confidence will be watched to see whether housing weakness is spilling over to the broader economy.”
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