NZ GDP growth stalls, RBNZ to cut?

By Leith van Onselen

Statistics New Zealand has released national accounts figures for the September quarter of 2018, with Gross domestic product (GDP) rising by just 0.3% over the quarter to be up 3.0% year-on-year. GDP per capita was flat in the September quarter but rose by 1.0% year-on-year.

Growth my sector was mixed, with 11 out of 16 industries growing:

Real gross national disposable income (RGNDI) – which measures the real purchasing power of New Zealand’s disposable income – rose by 0.9% in the September quarter and by 3.3% year-on-year:

Whereas RGNDI per capita was up 0.5% in the September quarter and by 1.3% year-on-year.

Statistics New Zealand points out that New Zealand’s economy is growing above the OECD average:

However, it should be noted that New Zealand’s population is growth is among the fastest in the world at 1.9%, owing to the nation’s high immigration program:

Thus, New Zealand’s growth figures are being heavily inflated, and per capita growth is soft, much like Australia.

ANZ changed its call to a cut today:

There are multiple drivers of this changed call but in short they come down to a weaker outlook for medium-term inflation, risks around global growth and liquidity, and the proposed capital changes for banks. Our view of the New Zealand growth outlook has not materially changed.

The RBNZ is likely to conclude that economic momentum is insufficient to deliver inflation sustainably at the midpoint.

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Leith van Onselen

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