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Our Blog

NZ GDP growth stronger than expected

17 March 2016
economy, GDP, New, Zealand
December 2015 quarter GDP growth came in at +0.9% for the quarter, stronger than both market and RBNZ expectations that had gravitated to an expected increase of +0.7%.  Annual average growth for calendar 2015 was +2.5%.

The make-up of the result was largely as expected with construction and retail sales showing strong growth in activity. The upside surpriseover the quarter was mostly on the services side of the economy.

The outlook for the economy remains one of the degree to which some large positive and large negatives offset each other. On the positive side of the equation population growth, construction and strong tourism activity are key supports for the economy. However, the challenges in the dairy sector are a significant negative. On balance we expect another year of modest growth in 2016 – our current forecast is for annual average growth of 2.6% in calendar 2016.

We see no implications for the RBNZ in this result. While growth over the quarter was somewhat stronger than the Bank was expecting, we think their quarterly forecasts for the first half of 2016 (0.7% and 0.8% for March and June quarters respectively) look a bit on the optimistic side.  We are expecting 0.6% in each of those quarters. We therefore see the Bank delivering their already-signaled interest rate reduction in either April or June. 

This blog post has been prepared to provide general information and does not constitute 'financial advice' for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, 'AMP') make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.

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