Research

New Zealand Insights - March 2018

By AMP Capital

The New Zealand economy remains a solid performer. Since the last New Zealand Insights we have seen an upward review to New Zealand’s recent historical growth track, followed by an upward revision of labour productivity performance, though we remain concerned about the recent weakness in business confidence. While retail spending has been strong in recent years, it’s the Government that is going to provide a significant boost to growth later in the year as government spending picks up. The global growth environment is the biggest tailwind for the New Zealand economy, though there are emerging headwinds from a possible trade war with the US. Overall CPI inflation remains subdued, but with solid above-potential growth ahead, further tightening in the labour market will see wage pressure intensify.

Key points

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Conditions now right for a pick-up in productivity

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Lower business confidence remains a concern

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Fiscal policy will provide significant boost to growth

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Retail spending still strong, but likely to slow

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Global economic growth in a strong synchronised upswing

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Core inflation remains subdued, monetary policy on hold

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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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