Economic research & market strategy

Here you will find economic research, strategy and forecasts direct from our specialists.

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Weekly Commentary

Weekly coverage of recent and upcoming economic and market events.

September 26
September 19

To view archived reports click here.

RBNZ OCR review, September 2016 – Second verse, same as the first - 22 September 2016
As we expected, the RBNZ left the OCR unchanged at 2% and repeated much of the language from its previous statement. The intended message was that a 25bp OCR cut in November remains on track.

Fortnightly Agri Update - 21 September 2016

RBNZ OCR preview, September 2016 – Stay the course - 16 September 2016
We expect the OCR to remain at 2% at next Thursday’s review. But with developments more or less balanced since the last review, we expect the RBNZ will continue to signal a rate cut in November.

Home Truths: Westpac's monthly commentary on the NZ housing market - 16 September 2016
A bumper issue this month, with lending restrictions, asset valuations and city planning all in the spotlight.

Better balance - NZ GDP growth 0.9% in Q2 - 15 September 2016
GDP rose by 0.9% in the June quarter, a touch below forecasts. However, the downside surprise was offset by an upward revision to Q1 growth, meaning annual GDP growth of 3.6% was in line with expectations. The biggest contribution to growth this quarter came from the construction sector, while activity associated with the rampant housing market is also being reflected in strong growth in real estate services.

Easing wider - NZ Current Account review, Q2 2016 - 14 September 2016
The current account deficit narrowed to 2.9% of GDP in the year to June. The goods trade deficit improved slightly in seasonally adjusted terms, due to a temporary surge in export volumes. The services surplus narrowed this quarter. While the tourism sector locally continues to go from strength to strength, New Zealanders are also spending more on trips overseas.

Something for everyone - NZ GDP and Current Account preview, Q2 2016 - 8 September 2016
We expect a solid 1% rise in June quarter GDP, led by construction but with gains broadening across sectors. A surge in goods exports is expected to contribute to a narrowing in the current account deficit.

Fortnightly Agri Update - 7 September 2016

NZ Local Knowledge - 6 September 2016
Activity indicators perked up in July, pointing to a continuation of solid growth in the economy. Trends in the construction sector remain the most positive, while tighter lending restrictions are weighing on housing turnover. 

NZ Building work put in place June quarter 2016 - 2 September 2016
After the March quarter’s remarkable rise in the volume of building work put in place, we were expecting more modest growth. But that was not the case. Building work rose an astonishing 5.5% in the June quarter.

June quarter 2016 HLFS review - 17 August 2016
The unemployment rate fell to 5.1% in the June quarter. However, the underlying details are not easily interpreted. The 2.4% jump in employment growth certainly overstates the extent of the lift in employment in the June quarter. Stepping back and looking at a broader suite of labour market indictoars, the picture remains of a gradually improving labour market, albeit one where wage pressure is still noticably absent.  

Fortnightly Agri Update - 17 August 2016

NZ Retail spending goes for gold - 11 August 2016
New Zealand retail sales surged in the June quarter. However, retail prices remain subdued. In addition, the past few years have seen stark divergences across the economy.

RBNZ August Monetary Policy Statement review - 11 August 2016
The Reserve Bank reduced the Official Cash Rate by 25bps to a record low of 2%. They also signalled that further easing is likely.We expect that the RBNZ will cut rates again in November, and there is the risk of additional cuts further ahead.The strength of the NZ dollar will be a key factor affecting the stance of monetary policy.

NZ Local Knowledge - 10 August 2016
Activity indicators were mixed in June, but still point to a pickup in GDP growth for the quarter as a whole. Construction and house prices continue to show the strongest upward trends. 

RBNZ MPS Preview, August 2016 – It’s in the bag - 4 August 2016
The RBNZ has all but declared that it will cut the OCR again in its August review. The strong New Zealand dollar increases the risk that inflation remains uncomfortably low, making a case for further policy easing. We now expect another OCR cut in November, to a low of 1.75%.

Fortnightly Agri Update - 3 August 2016

Fortnightly Agri Update - 20 July 2016

Petered out - NZ Consumer Price Index review, Q2 2016 - 18 July 2016
Inflation was softer than expected in the June quarter, with the lower New Zealand dollar seemingly no longer boosting tradables inflation. Domestic inflation remains largely absent, aside from the under-pressure building industry. 

Two steps forward - NZ Consumer Price Index preview, Q2 2016 - 13 July 2016
We expect a 0.5% rise in consumer prices, slightly less than the Reserve Bank's forecast. Annual inflation is past its lows, but a return to the inflation target remains a drawn-out process, and one that will be hindered by the New Zealand dollar's recent gains. 

NZ Local Knowledge - 7 July 2016
Domestic activity held steady in May, after some strong results in April. House prices and construction activity show the strongest upward trends. 

Fortnightly Agri Update - 6 July 2016

Getting on with the job - NZIER Quarterly Survey of Opinion, June 2016 - 5 July 2016
Firms reported solid results over the last quarter, renewing their confidence about the near-term economic outlook. However, there is still little sign of inflation pressures emerging.

Home Truths: Westpac's monthly commentary on the NZ housing market - 17 June 2016
A fresh perspective on the New Zealand housing market.

Weight of numbers - NZ GDP review, Q1 2016 - 16 June 2016
The New Zealand economy grew by 0.7% in the March quarter, largely driven by population growth. The underlying picture has softened in the last year as dairy prices have plunged and the quake rebuild has peaked.

Fortnightly Agri Update - 16 June 2016

As goods as it gets - NZ current account review, Q1 2016 - 15 June 2016
Cheaper oil and strong tourist spending saw the current account deficit narrow further in the March quarter. But we expect it to widen again as the New Zealand economy moves into a borrow-and-spend dynamic.

Slim pickings - NZ GDP and Current Account preview, Q1 2016 - 10 June 2016
We expect a modest 0.6% rise in March quarter GDP, boosted by construction but weighed down by meat processing. Lower oil prices and strong tourism earnings are likely to have narrowed the current account deficit. 

RBNZ MPS Review, June 2016 - Hold fire - 9 June 2016
The June MPS was very much in line with our expectations. The RBNZ left the OCR on hold, but signalled that it expects to deliver one further OCR cut this year, depending on the data. 

NZ Local Knowledge - 8 June 2016
Our indicators point to continued steady growth in the New Zealand economy, although a rare Easter-less April probably exaggerated the strength of the upturn over the month. 

NZ Building work put in place March quarter 2016 - 3 June 2016
Total building work put in place rose very strongly in the March quarter, up 5.3% in volume terms.

Fortnightly Agri Update - 2 June 2016

RBNZ MPS Preview, June 2016 - Down to the wire - 2 June 2016
The June OCR decision is very finely balanced. But we now believe that the RBNZ is more likely to leave the OCR unchanged (we previously expected a cut). We now expect an OCR reduction in August. We still expect that the low-point for the OCR this year will be 2.0%.

NZ 2016 Government Budget: Full coverage - 26 May 2016
Full coverage of the Government's 2016 budget, including our assessment of the Treasury's economic and fiscal forecasts, and a summary of policy announcements.

NZ 2016 Government Budget First Impressions:  Fiscal mirage - 26 May 2016
Our first impressions from the Government's 2016 budget: The Treasury's forecast of large surpluses through to the end of the decade seem unrealistically optimistic to us.

Treading water - NZ Budget 2016 preview - 20 May 2016
This year's Budget is expected to be relatively low-key, with a focus on debt reduction. The Treasury is likely to have maintained its forecasts of strong economic growth, but we are not so confident that these will eventuate.

Fortnightly Agri Update - 18 May 2016

March 2016 quarter NZ retail sales – Spending growth eases back, prices subdued - 13 May 2016
Following firm gains last year, retail sales growth has eased back. Nevertheless, spending remains healthy. Inflation remains low, helping households’ budgets to stretch further.

NZ Local Knowledge - 5 May 2016
March was a middle-of-the-road month for our activity indicators, with soft agricultural sector but a resurgent housing market. 

Normal transmission resumes - NZ Q1 2016 labour market review - 4 May 2016
The unemployment rate rebounded in the March quarter, lifting to 5.7%. But this only partially reversed the sharp fall last quarter. Overall we interpret today’s data as strong as employment lifted sharply. This is a sign that the NZ economy was solid in the March quarter. Wage inflation remains subdued, although the quarterly outturn was a touch higher than the market had pencilled in. 

Fortnightly Agri Update - 4 May 2016

The wood for the trees - Q1 2016 labour market preview - 29 April 2016
Indications are that the labour market started the year in good health.

Softly softly - RBNZ Review - 28 April 2016
As expected, the OCR remained unchanged at 2.25% at today’s OCR Review.

RBNZ OCR Preview, April 2016 - A question of tactics - 20 April 2016
We expect the RBNZ to leave the OCR on hold, for tactical reasons. Nevertheless, we expect a firm signal of an OCR cut to come.

Fortnightly Agri Update - 20 April 2016

No fuel for the fire - NZ Consumer Price Index review, Q1 2016 - 18 April 2016
Inflation remained subdued in early 2016, as the fall in world oil prices counteracted the lower NZ dollar. But if anything the details were on the high side of the Reserve Bank's expectations, diminishing the case for an OCR cut as soon as next week.

Home Truths: Westpac's monthly commentary on the NZ housing market - 15 April 2016
A fresh perspective on the New Zealand housing market.

Oil be back - NZ Consumer Price Index preview, Q1 2016 - 13 April 2016
The renewed plunge in world oil prices will keep inflation subdued once again in the March quarter. However, we don't think it will constitute enough of a surprise to prompt another OCR cut as soon as this month.

Fortnightly Agri Update - 6 April 2016

NZIER Quarterly Survey of Opinion, March 2016 - 5 April 2016
Firms reported solid activity over the last quarter, but the plunge in dairy prices has revived concerns about the near-term outlook.

NZ Local Knowledge - 5 April 2016
More evidence of a slower pace of growth over the early part of this year. The shortfall in dairy income may be putting the pinch on spending, but construction continues to march to new highs.

March 2016 quarter Westpac McDermott Miller Consumer Confidence Index - She’ll be right - 21 March 2016
Consumer confidence nudged down in the early part of 2016 as households have become increasingly worried about where the economy is heading over the next few years.

No cause to celebrate - NZ current account review, Q4 2015 - 16 March 2016
The current account deficit narrowed in the year to December, but lower dairy exports, lower tourist spending and lower corporate profits are nothing to celebrate.

Fortnightly Agri Update - 16 March 2016

It's alright, it's OK - NZ GDP and Current Account preview, Q4 2015 - 11 March 2016
The New Zealand economy looks to have been in reasonable shape at the end of 2015, with solid growth in GDP and a steady current account deficit.

RBNZ MPS Review, March 2016 - Lower and lower - 11 March 2016
The RBNZ reduced the OCR to 2.25% and signalled that it expects to reduce the OCR once more this year. This fulfils our long-running forecast that the OCR would fall below 2.5% in 2016.

NZ Local Knowledge - 8 March 2016
A middling set of data to start the year, albeit in line with our view that the March quarter will mark the low point for GDP growth.

RBNZ MPS preview, March 2016 - 3 March 2016
The Reserve Bank's Monetary Policy Statement is likely to signal a lower path for interest rates over the next year. But the timing of rate cuts remains finely balanced. We expect cuts in June and August, but every OCR review date - including next Thursday - should be considered live.

NZ Building activity surges, with more to come - 3 March 2016
Building work put in place surged by 2.5% in the December quarter, and current rates of building consents suggest a lot more growth is to come.

Fortnightly Agri Update - 2 March 2016

Fortnightly Agri Update -  17 February 2016

NZ Q4 2015 retail sales - Sales firm, prices stagnant
Retail spending growth remains firm. Inflation remains low, helping households’ budgets to stretch further.

NZ Local Knowledge - 12 February 2016
The New Zealand economy made a solid finish to 2015, setting the stage for moderate growth this year. But there are some looming headwinds in the form of a slowing housing market and low dairy prices.

Home Truths: Westpac's monthly commentary on the NZ housing market - 12 February 2016
A fresh perspective on the New Zealand housing market.

Q4 Labour Market Review - 3 February 2016
The unemployment rate dropped to 5.3% in the December quarter, in stark contrast to the small increase we had expected.  Employment growth was up a solid 0.9% while there was also a sharp fall in participation. Wage inflation remains moderate. But with inflation very low, workers’ wages are going further after adjusting for inflation. On its own, today's data reduces the chance that the RBNZ will cut the OCR in March.

Fortnightly Agri Update - 3 February 2016

Grinding higher- NZ Q4 2015 Labour Market Preview 29 January 2016
We expect employment growth rebounded in the December quarter. However, growth in the labour force continues to outpace employment growth, implying a further lift in the unemployment rate to 6.1%. Rising unemployment and a subdued inflation backdrop means there is little upward pressure on wages. Labour market data is the key release between now and the March Monetary Policy Statement. A weak outturn would support arguments in favour of a March rate cut.

RBNZ OCR Review, January 2016 - A clearer case - 28 January 2016
The RBNZ signalled that it may cut the OCR this year. This was encouraging for our long-held forecast that the OCR will fall to 2.0%. We now regard March as the most likely start date for OCR cuts (previously June).

Clear cut - RBNZ OCR preview - 25 January 2016
We expect the Reserve Bank to shift to a more explicit easing bias in this Thursday's OCR Review. The domestic economy is ticking over nicely, but inflation is at risk of falling below target for an extended period.

Down low, too slow - NZ Consumer Price Index review, Q4 2015 - 20 January 2016 
Inflation in New Zealand was very weak in 2015 and it wasn't just about oil prices. We continue to expect more OCR cuts this year, with a growing risk that they come sooner rather than later.

Fortnightly Agri Update - 20 January 2016
The latest developments in New Zealand's agri markets.

A brighter mood - NZIER Quarterly Survey of Opinion, December 2015 - 19 January 2016
Business conditions improved towards the end of 2015, relative to the poor first half of the year. Capacity pressures are growing, but evidence of rising prices remains limited.

Break in the clouds - Westpac McDermott Miller Employment Confidence Index December 2015 - 18 January 2016
The slide in the Employment Confidence Index was arrested in the December quarter as people became a little less concerned about conditions in the labour market. However the overall level of confidence remains relatively low. 

Low - NZ Consumer Price Index preview, Q4 2015 - 15 January 2016
Weak food and fuel prices are set to send annual inflation to a new low for the cycle.

A pottle of optimism - Westpac McDermott Miller Regional Economic Confidence, December quarter 2015 - 11 January 2016
Regional economic confidence remained saw a small rebound particularly in dairying regions, with a higher dairy payout now expected.

To view archived reports click here.

In-depth review of topical issues.

Deeper insights

  • NZ Industry Insights Horticulture - 28 July 2016
    The horticulture sector is enjoying strong growth across many products. A lot more growth is possible, but some risks associated with export concentration and land values are emergings.
  • NZ household debt climbing relative to other economies - 12 July 2016
    Household debt in New Zealand has risen to record levels, and it has been rising at a faster pace than in other developed economics. In large part, this has been due to the strong gains in New Zealand house prices. The increase in household debt doesn’t mean that the economy is about to topple over. However, it is likely to provide a brake on longer term growth, and means that we are more vulnerable to unfavourable changes in economic conditions. 

  • The aftermath of the Brexit vote - 28 June 2016
    Following the Brexit vote, we take a look at some of the key questions regarding the UK’s economic outlook, and how New Zealand might be affected.

  • Core workout - Assessing the RBNZ's core inflation measure - 22 February 2016
    The RBNZ has recently been drawing attention to its model-derived estimate of core inflation, which is much more stable than headline inflation. In this article we review how the RBNZ's core inflation measure is calculated, the limitations of this approach, and what it may tell us about the future of inflation.
  • The Paris Agreement: What it means for the New Zealand economy - 4 February 2016
    New Zealand is a signatory to the Paris Agreement on climate change. This report examines and evaluates the impacts on New Zealand of the Agreement and the ETS framework.

  • What’s been happening to retail prices? - 8 December 2015
    Since 2010, the overall level of retail prices in New Zealand has essentially been flat. In part, this has been due to the strength of the NZD and modest increases in costs. But this isn’t the whole story. The key change in recent years has been a strong increase in price competition in the retail sector. This has resulted in downward pressure on prices and compression of retail margins. Such conditions are likely to persist for some time. 
  • Ship shape: What bigger container vessels mean for New Zealand - 17 November 2015
    The average size of container ships visiting New Zealand will rise more than 50% by 2030. The number of ship visits is expected to grow with increased trade and containerisation.
  • Still going strong – A look at economic activity in Canterbury - 22 October 2015
    In this report we take a look at economic conditions in Canterbury, drawing on our recent talks with businesses in the region.
  • An update on New Zealand's migration outlook - 8 October 2015
    Net migration has reached record highs, thanks to a rising inflow of foreign migrants and a drop in the outflow of New Zealanders. Weak offshore labour markets could keep net migration high for a while yet. But over the longer term the current rate of population growth looks unsustainably high.
  • Industry insights – Oil, Gas and mining - 22 September 2015
    The outlook for Gold mining is decidedly stronger than for Coal mining, and Oil and gas.  We expect prices for coal and oil to remain low, creating the risk of job losses and in the case of oil and gas, far less exploration in New Zealand.  Meanwhile gold is expected to benefit from greater uncertainty in the global outlook, as an investor safe haven.
  • Outlook for Auckland residential construction - 18 August 2015
    Auckland continues to build fewer dwellings than is required to meet the demands of population growth. We estimate that the Auckland construction industry can deliver 10,800 dwellings a year within two years without risk of overbuilding, but that levels higher than this will be hard to achieve.
  • Peak or Plateau: Update on the Canterbury rebuild - 17 July 2015
    Reconstruction in Canterbury is now well advanced and spending appears to have reached a peak. We expect that construction activity in the region will remain elevated for some time. However, going forward reconstruction isn’t going to provide the same sort of boost to growth and employment as it has in recent years. And eventually the rebuild will become a drag on economic conditions.
  • A new take on the Auckland housing market - 14 May 2015
    This is an unabridged resend of our Home Truths Special Edition, sent for the benefit of customers who subscribe to our economic bulletins but not our regular housing market commentary.
  • Grow NZ survey results - 22 April 2015
    Results from Westpac's recent survey of SMEs, focussing on use of technology.
  • Focus on the Canterbury rebuild - 9 April 2015
    The Canterbury rebuild will be our nation’s largest ever construction project, and it will play an important role in shaping nationwide economic conditions for a number of years. In this Bulletin, we look at how the reconstruction process is evolving, and what we expect to see going forward.

To view archived reports click here.

Quarterly Economic Overview

Quarterly publication providing an in-depth economic outlook, topical issues and forecasts.

August 2016
The Economic Overview summarises the outlook for the New Zealand economy, global economy, agriculture sector, interest rates and exchange rates. This quarter’s special topic looks that the growth in New Zealand’s household debt in a global context.

May 2016
The Economic Overview summarises the outlook for the New Zealand economy, global economy, agriculture sector, interest rates and exchange rate. This quarter's two special topics cover macro-prudential policy options and the services sector.

February 2016
The Economic Overview summarises the outlook for the New Zealand economy, global economy, agriculture sector, interest rates and exchange rate. This quarter's special topic covers New Zealand's commitments under the Paris Protocol.

November 2015
The New Zealand economy has dodged the worst of the downturn in world dairy prices, but the slowing global economy and the risk of drought this summer will continue to weigh on agriculture. We expect GDP growth to slow to 2% next year - no more than population growth - before accelerating again in 2017. Through these ups and downs we expect one dynamic to remain constant: low inflation.

August 2015
New Zealand's economic outlook has changed. There has been a ferocious decline in the global price of New Zealand's biggest export, and the Canterbury rebuild has peaked nine months earlier than anticipated. This Economic Overview discusses the revised outlook, including our expectation that GDP growth will fall below 2%, unemployment will rise to 6.5%, and the OCR will fall to 2.0%.

May 2015
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

February 2015
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

November 2014
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

August 2014
A summary of the prospects for New Zealand's economy, interest rates, exchange rate and agricultural sector, plus an overview of the global economy.

May 2014
As New Zealand's economic upswing rolls on, we are starting to see encouraging signs that the economy still has room to grow without generating excessive inflation. However, we still expect a substantial OCR hiking cycle over the coming three years. This year's election is a key risk event - the Special Topic this quarter provides a guide for financial markets.

February 2014
The construction boom and rising house prices are now maturing themes for the New Zealand economy. This quarter, the NZ Economic Overview focusses on the causes and consequences of New Zealand's stratospheric export commodity prices.

November 2013
Comprehensive analysis and forecasts of the New Zealand economy, global economy, and financial markets.

August 2013
New Zealand is now clearly in the grip of a self-sustaining economic upswing, driven by construction activity and house prices. Our Economic Overview discusses the implications for interest rates while noting that the upturn will prove temporary. The remaining "forks in the road" for New Zealand include the question of Fed tapering and the possible impact of the RBNZ's new mortgage restrictions. Our expectation of a substantial OCR hiking cycle has not changed.

May 2013
The New Zealand economy is caught in a tug-of-war between high GDP growth and low inflation. The May Economic Overview includes articles on the New Zealand economy, New Zealand dollar, inflation and interest rates, and the international outlook. Our new section, Agricultural Outlook, covers the impact of drought on the New Zealand economy. And our special topic discusses the Reserve Bank's macroprudential tools.

February 2013
The economy is starting to move as the Canterbury rebuild hits its straps. But the stratospheric exchange rate has kept inflation in check. So the RBNZ has been able to keep interest rates low. The predictable result has been improved consumer confidence and higher house prices. Our forecasts for 2013 follow the same formula, but with greater intensity on all fronts.

November 2012
After a strong start to 2012, the New Zealand economy has lost momentum, reflecting the patchiness of the current construction-led economic upturn.

August 2012
Growth is accelerating but low inflation and the strong exchange rate mean interest rates will stay low for longer. This edition of the Economic Outlook discusses the possibility that rising house prices will reignite New Zealand's economic imbalances.

May 2012
The global economy has cooled as expected, but the surprisingly strong NZ dollar and soft inflation point to low interest rates for a while longer.

February 2012
Export conditions are deteriorating, but we envisage a dip rather than a disaster. Low interest rates will boost the housing market.

 

Regional Roundup

Quarterly focus on the outlook for New Zealand's regions.

Regional Roundup - 18 August 2016
The fortunes of New Zealand’s regions vary depending on their exposure to dairy and their ability to capitalise on current drivers of economic activity – tourism, horticulture and construction.

Regional Roundup - 19 May 2016
Weakness in dairy, strength in tourism and other services, and construction activity continue to dominate regional outlook, with low interest rates for longer now also having an impact.

Regional Roundup - 23 February 2016
Our quarterly Regional Roundup examines the recent fortunes of each region in New Zealand, and their outlook for the year ahead.

Regional Roundup - 10 November 2015
Three stories are driving regional economic fortunes – dairy, impending drought, and construction and housing activity.