NZ GDP Preview: Forecasts from four major banks, weaker but not a game changer for the OCR

Stats NZ is set to release Gross Domestic Product (GDP) figures for the second quarter on Wednesday, September 14 at 22:45 GMT and as we get closer to the release time, here are forecasts from economists and researchers of four major banks regarding the upcoming growth data. 

New Zealand’s economy is seen expanding by 0.8% in the three months to June, on a quarterly basis. Meanwhile, the country’s GDP rate is at -0.2% YoY.

ANZ

“We’ve pencilled in a 0.4% QoQ expansion – a downgrade from our previous pick of 1.0%, and well below the RBNZ’s August MPS forecast of 1.8%. Importantly, just like the unexpected contraction in Q1, weaker-than-expected growth in Q2 doesn’t mean a lot for the OCR if supply-side hurdles like labour shortages are a big part of the problem (supply-side constraints are inflationary and constrain activity). In that context, while some indicators suggest the economy was in technical recession over the first half of 2022, given lingering wage and CPI inflation pressures, the RBNZ will need to keep on hiking even if this turns out to be the case. They need to drive demand below the level of potential supply and keep it there for a time. We’re nowhere near that point yet.”

Westpac

“We expect a 1.6% rise in GDP for the June quarter. This follows a 0.2% drop in the March quarter as Omicron swept through the country. The reopening of the border, and the resumption of overseas tourism, is expected to provide a significant boost to areas such as travel services, accommodation, and arts and recreation. A result in line with our view would emphasise that the New Zealand economy remains far from recession. Indeed, the challenge is one of an economy that is running too hot.” 

TDS

“Construction and wholesale trade likely boosted growth over the quarter while manufacturing and retail sales remain a drag on growth. As our forecast (1.6%) is closer to the RBNZ (1.8% QoQ), we think a more positive GDP outturn should lock in another 50 bps hike in October as the Bank should be comfortable with tightening monetary conditions ‘at pace’.”

Citibank

“Our GDP growth forecast of 1.0% is below the RBNZ’s stronger forecast of 1.6%. But there are enough abnormal influences in the Q2 GDP data and lingering concerns about inflation and wages growth for the RBNZ to maintain its current hawkish policy stance for one final +50 bps move at the October 5 policy review meeting before the RBNZ moves to a +25 bps move at the November 25 meeting for an OCR peak of 3.75%.”