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17 Mar 2014
Flash: NZ GDP Q4 eyed, but main focus on rate normalisation - BNZ
FXStreet (Bali) - According to Economists at Bank of New Zealand, while Thursday’s Q4 GDP report will be interesting, it is expected to carry little relevance, as focus has now shifted on how the economy is going to react to the process of OCR normalisation now underway.
Key Quotes
"The data premium will be in the upcoming business and sentiment surveys. And anything else that might seem exposed to rising rates. This would include house prices, for sure."
"But just to cover off the economic pulse of 3-6 months ago, the Q4 GDP report is expected by the markets to register a 0.9% expansion. This would deliver annual growth of 3.1%. The Reserve Bank’s Monetary Policy Statement (MPS) of last week estimated a 0.8% quarterly gain."
"Formally, we are more in line with the RBNZ on this, although we can easily see how the market consensus’ 0.9% expectation can be achieved, as this is the way we’re seeing the balance of risk around Q4 GDP. And even if the result is 0.7% or a bit under, note that it’s following a ripper 1.4% for Q3, so some sort of averaging process needs to be applied to keep things in perspective."
"As for the stories of Q4 GDP some features to note will likely be a statistical pause in the strong construction uptrend, with quarterly growth coming more from manufacturing, and fast growth in wholesale and retail trade as part of general strength in the service sector. Net trade will be a large positive as export volumes recover from the early-2013 drought, but coinciding with a reduction in inventory."
Key Quotes
"The data premium will be in the upcoming business and sentiment surveys. And anything else that might seem exposed to rising rates. This would include house prices, for sure."
"But just to cover off the economic pulse of 3-6 months ago, the Q4 GDP report is expected by the markets to register a 0.9% expansion. This would deliver annual growth of 3.1%. The Reserve Bank’s Monetary Policy Statement (MPS) of last week estimated a 0.8% quarterly gain."
"Formally, we are more in line with the RBNZ on this, although we can easily see how the market consensus’ 0.9% expectation can be achieved, as this is the way we’re seeing the balance of risk around Q4 GDP. And even if the result is 0.7% or a bit under, note that it’s following a ripper 1.4% for Q3, so some sort of averaging process needs to be applied to keep things in perspective."
"As for the stories of Q4 GDP some features to note will likely be a statistical pause in the strong construction uptrend, with quarterly growth coming more from manufacturing, and fast growth in wholesale and retail trade as part of general strength in the service sector. Net trade will be a large positive as export volumes recover from the early-2013 drought, but coinciding with a reduction in inventory."