Slight decline forecast for GDP
ASB forecasts a 0.3% to 0.5% contraction for New Zealand’s Q2 GDP, aligning with the Reserve Bank’s projections.
“At this point it still looks like the outcome will be a contraction,” said Nick Tuffley (pictured above), ASB chief economist, adding that the Building Work Put in Place survey and a sluggish housing market are contributing to the dip.
Weakness in key sectors
The retail and construction sectors continue to drag down growth, with the recent business financial data expected to shed light on manufacturing, the third-largest sector.
Tuffley also mentioned the impact of reduced building activity.
“It reinforces that construction, along with the retail sector, will be dragging on Q2 growth,” he said.
Migration and spending data in focus
This week, net migration data is expected to show further declines, driven by record NZ citizen departures.
“The departing NZ citizens (with all their skills and experience) is driving the net figure,” Tuffley said.
Additionally, electronic card transaction data will be monitored for any signs of increased consumer spending following recent tax cuts.
Global economic outlook and interest rate speculation
While Australia saw modest 0.2% growth in Q2, household consumption contracted, signaling cautious consumer behaviour.
Tuffley also noted that the US CPI and upcoming Federal Reserve decisions may point toward further rate cuts, with global markets pricing in a possible 25bp or even 50bp cut.
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