New Zealand Insights - June 2017

By AMP Capital

The New Zealand economy has come through a relatively subdued six months. A series of one-off negatives impacting the final quarter of 2016 and the first quarter of 2017 conspired to deliver below trend growth of 0.9% over the six months to March. Two consecutive quarters of low growth begs the question of where to from here?

Key points


Growth in consumer activity to remain solid as population growth remains strong and labour income continues to rise.


We see annual average GDP growth of 2.6% this year, rising to 3.0% in 2018 on the back of a return to trend plus a bit of fiscal stimulus, before moving lower again to 2.5% in 2019.


Headline inflation has spiked higher over the last two quarters but we expect this to move lower in 12-months, while core inflation remains benign.


Monetary policy on hold until mid-2018, although with recent weakness in growth we see a first hike coming later rather than earlier.


We retain a neutral view on interest rates, however, we expect both short and long-term rates to move higher toward the end of 2017.

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Important notes

This article 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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