Growth still subdued but expected to blip higher
Inflationary pressures remain equally subdued
Labour market remains tight though employment growth has moderated
Room to move on fiscal policy
External accounts in relatively good shape
Currency expected to range-trade in the near-term
The New Zealand economy continues to expand at a subdued pace, at least when compared to recent history. A number of factors have contributed to the slowdown, including less consumer spending and softer business confidence. We still expect a blip higher in growth this year, but not of the magnitude previously expected.
Fiscal policy will be a key source of support for growth, as will higher wages. While dairy prices have softened recently, continued population growth and construction activity are still expected to underpin solid levels of activity. And already easy monetary policy may get easier still.
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