NZ: Moderating growth - ANZ

In view of analysts at ANZ, New Zealand’s growth has continued to moderate, from above 4% y/y in mid-2016 to 2.6% over the year to September 2018.

Key Quotes

“After a number of years of expansion, the unemployment rate is sitting at a very low level of 3.9%, with domestic inflation starting to increase. However, forward-looking indicators point to further moderation in GDP growth and it appears that the peak in resource pressures is behind us.”

“In the face of building headwinds, we see the economy growing 2-3% y/y in coming years, with a durable lift in inflation to the RBNZ’s 2% target midpoint looking more challenging to achieve. Add to that slowing momentum in the global economy and building risks, and it points to a more cautious approach from the RBNZ in time.”

“We expect that OCR cuts will eventually be required, with the first pencilled in for November this year.”