The New Zealand economy is in fundamental good shape, though growth has proven softer than expected in the early part of 2018. The economy is close to running at full potential and has already maxed out capacity in the building and construction sector. Employment growth has slowed as the labour market has closed in on full employment, and population growth is moderating as net migration slows. The biggest risk to the growth outlook is low business confidence, with mycoplasma bovis a major factor impacting confidence levels and the farming community. But on a brighter note, New Zealand’s merchandise terms of trade remain close to record high levels.
Annual pace of growth has slowed
Expect fiscal policy to deliver a boost to growth in the second half of the year
Business confidence still negative
External sector in good shape
Labour market continues to tighten
New Zealand dollar has weakened in recent months
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