NZ: GDP likely expanded 0.7% q/q in Q2 - ANZ

New Zealand’s June quarter GDP figures are released next Thursday and analysts at ANZ expect GDP expanded 0.7% q/q in Q2 – a respectable print. 

Key Quotes

“Economic momentum continues to soften from the 4½% annual pace experienced in mid-2016. Annual growth is expected to continue to moderate in Q2 from 2.7% to 2.5% y/y – and is now below where we see trend.”

“If GDP is in line with our expectations, we expect to see modest per capita GDP of 0.3% q/q to be up just 0.5% y/y – pointing to an underlying pulse that is more muted than the headline number suggests.”

“While next week’s GDP print is expected to be solid, it is already being overshadowed by forward-looking indicators of activity into the second half of next year. There are concerns about the degree of economic momentum, particularly given the subdued read coming from business confidence surveys and the fact that the RBNZ has expressed concern about the outlook for activity.”

“So far, data for Q3 has been mixed but generally respectable – and there are a number of factors that are supportive of growth. The terms of trade remains elevated, fiscal policy looks set to provide a boost, and net exports are becoming less of a drag thanks to recent exchange rate depreciation. At the same time, the labour market is tight and households appear resilient, albeit a little warier.”

“Overall, we don’t expect the economy to roll over just yet, although we do think it will be difficult to grow at trend.”

“In terms of the details of next week’s release, we expect primary production increased 1.9% q/q, contributing 0.1%pts to quarterly GDP growth.”

“Goods production is expected to have increased +0.6% q/q, contributing 0.1%pts to quarterly growth.”

“Services industries are expected to contribute +0.5%pts, increasing 0.8% q/q.”

“We expect to see a 0.6% q/q lift in expenditure GDP.”