Economic research & market strategy

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

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Weekly Commentaries

Weekly Commentary

Weekly coverage of recent and upcoming economic and market events.

16 Jul 2018
09 Jul 2018



Economic Data Reports

NZ CPI review, Q2 2018 – Beyond the headlines - 17 July 2018
Inflation fell short of expectations in the June quarter. But the details were less benign than the headline – domestic inflation pressures are gradually picking up.

NZ CPI preview, Q2 2018 - Filling up - 12 July 2018
We expect a 0.6% rise in consumer prices for the June quarter, lifting the annual inflation rate to 1.7%. Fuel prices have switched from being a drag on inflation to a boost this year, but we’re not convinced that this effect will persist into next year.

Fortnightly Agri Update - A step lower - 4 July 2018

NZIER Quarterly Survey of Business Opinion, June 2018 - 3 July 2018
NZ business confidence fell sharply in Q2. The underlying details of the release were undeniably soft, supporting our view of a lull in investment and hiring this year. There were also signs of emerging inflation pressure.

Uncertainty reigns: RBNZ OCR Review, June 2018
The RBNZ kept the OCR on hold, but gave no guidance as to the direction or timing of the next OCR move. 

Red herring: Preview of the RBNZ’s OCR Review - 22 June 2018
A preview of the RBNZ’s next OCR Review.

NZ Q1 GDP review – Slow news day - 21 June 2018
New Zealand’s GDP rose by 0.5% in the March quarter, in line with market expectations. The economy has lost some momentum as firms take a cautious approach to the new Government and as the housing market has cooled.

Home Truths, June 2018 – Tax and house prices - 21 June 2018
The housing market is positive for now, but Home Truths argues that the market will soon slow.

NZ current account, Q1 2018 – Better next time - 20 June 2018
The current account deficit widened to 2.8% of GDP in March. Exports fell sharply, but we expect some improvement in the next quarter.

Fortnightly Agri Update - Yes deer - 20 June 2018

NZ Q1 GDP and BoP preview – Loss of momentum - 14 June 2018
New Zealand’s economic growth appears to have slowed further in the first quarter of this year. We expect the current account deficit to widen a little, but to remain historically low.

Fortnightly Agri Update Turning the tables – Forestry and wood processing - 6 June 2018

NZ retail spending weaker than expected in March quarter - 21 May 2018
Retail sales were weaker than expected in the early part of 2018, with spending essentially flat over the March quarter. We expect spending growth will remain modest through the remainder of this year.

A ‘patient’ Budget - New Zealand Budget 2018 - 17 May 2018
A full analysis of the Government’s 2018 Budget.

New Zealand Budget 2018 First Impressions - 17 May 2018
No major surprises in this Budget, with the parameters and main initiatives signaled well in advance. Higher revenue, higher spending allowances particularly in the later years. Net debt on track to fall below 20% of GDP.

Fortnightly Agri Update Dairy debrief - 16 May 2018

NZ Budget Preview - A Balancing Act - May 2018
The new Government delivers its first Budget next week. The tax take is running well ahead of forecast, providing scope for additional operating spending while still sticking with its Budget Responsibility Rules. 

Home Truths, April 2017 – The market cools again - 11 May 2018
The housing market is now cooling again, much as Home Truths anticipated.

In with the new: Review of the RBNZ’s May 2018 MPS - 10 May 2018
A review of the RBNZ’s latest Monetary Policy Statement.

RBNZ MPS preview, May 2018 - 3 May 2018
A preview of the upcoming Monetary Policy Statement from the RBNZ.

NZ labour market review, Q1 2018 – No pay wave - 2 May 2018
New Zealand’s unemployment rate continues to fall, but there is no sign yet of wage inflation emerging.

Fortnightly Agri Update The big picture - 2 May 2018

NZ labour market preview, Q1 2018 – Stuck in the mud - 27 April 2018
There are signs that the tightening of the labour market has stalled in the early part of this year. We expect the unemployment rate to remain steady at 4.5% and wage growth to remain in line with previous quarters.

NZ CPI review, Q1 2018 – Inflation to remain subdued - 19 April 2018
Consumer prices rose 0.5% in the March quarter. The dip in the annual inflation rate should prove temporary, but at the same time we don’t expect it to test the upper half of the Reserve Bank’s target any time soon.

Fortnightly Agri Update Guacamole anyone? - 18 April 2018

Home Truths, April 2018 – Looming slowdown - 17 April 2018
The housing market is positive for now, but Home Truths argues that the market will soon slow.

NZ CPI preview, Q1 2018 – Down a bit - 16 April 2018
We expect a modest 0.5% rise in consumer prices for the March quarter. Base effects will bring the annual inflation rate down temporarily, and the introduction of a year’s free tertiary study will knock off an estimated 0.2%.

NZIER Quarterly Survey of Business Opinion March 2018 – A mixed bag - 10 April 2018
NZ business sentiment improved a touch in Q1, but remains below pre-election levels. Employment indicators were generally softer, supporting our view of a lull in hiring in 2018.

Fortnightly Agri Update A primer on Mycoplasma bovis - 4 April 2018

Travel journal: Observations from my recent tour of Europe - 27 March 2018
Chief Economist Dominick Stephens recently returned from a two week tour of Europe, including UK. This bulletin briefly details his observations of what Europeans are thinking about New Zealand.

A new era: The RBNZ’s new PTA and governance arrangements - 26 March 2018
A review of the RBNZ’s new Policy Targets Agreement and the announcement of upcoming changes to the RBNZ’s governance arrangements.

Curtain Raiser: RBNZ OCR Review, March 2018 - 22 March 2018
The RBNZ left its OCR guidance unchanged. From here, attention will turn to the new PTA, to be signed within a day or two.

Fortnightly Agri Update Plenty at steak - 21 March 2018 

RBNZ OCR preview, March 2018 – Last turn at bat - 16 March 2018
Acting Governor Spencer’s last OCR decision is likely to be a low-key affair, with no real surprises in the data in recent weeks. We expect the OCR to remain on hold until late 2019.

NZ Q4 GDP review – Subdued growth persists - 15 March 2018
December quarter GDP grew by 0.6%, in line with our forecast. We expect growth to remain subdued in the near term, due to growth constraints and the uncertain impact of the new Government’s policies.

NZ current account, Q4 2017 – Well contained - 14 March 2018
The current account deficit widened in the year to December, but remains at levels consistent with an improvement in New Zealand’s external imbalances.

NZ Q4 GDP and BoP preview – Late fade - 9 March 2018
The New Zealand economy’s momentum appears to have eased over the course of 2017.

NZ building work put in place, December quarter 2017 - 7 March 2018 

Fortnightly Agri Update Trump and trade - 7 March 2018 

Q4 2017 Retail spending review - 23 February 2018

Fortnightly Agri Update Down in the dumps - 21 February 2018

Get it? A short note on our GDP and OCR forecasts compared to the Reserve Bank's - 12 February 2018

Stay on target – Review of the Feb 2018 Monetary Policy Statement - 8 February 2018
A review of the RBNZ’s latest Monetary Policy Statement.

NZ labour market review, Q4 2017 – All work, no pay - 2 February 2018
New Zealand’s unemployment rate fell to its lowest since 2008. But wage growth remains subdued, suggesting that the labour market has room to tighten further. 

Fortnightly Agri Update A positive start to 2018 - 7 February 2018 

NZ labour market preview, Q4 2017 – Unemployment declining - 2 February 2018
We expect a further drop in the unemployment rate to a nine-year low of 4.5%. However, we may see some payback for the sharp spikes in employment and participation in the September quarter. 

The great moderation: Preview of the February 2018 Monetary Policy Statement - 1 February 2018
We expect the RBNZ to remain firmly on hold.

NZ CPI review Q4 2017 – Imported inflation remains absent  - 25 January 2018
Consumer prices rose just 0.1% in the December quarter, with widespread softness in imported goods prices. While the era of uncomfortably low inflation may have passed, there is little sign of a resurgence.

NZ CPI preview, Q4 2017 – Fuelled up and on the go - 17 January 2018
We expect a 0.4% rise in the December quarter CPI, led by higher prices for fuel, airfares and accommodation. Underlying inflation is expected to remain close to – but still below – the Reserve Bank’s 2% target.

NZ business opinion, Q4 2017 – Confidence down, prices up - 16 January 2018
Business confidence fell further in the December quarter, some but not all of which could be put down to the change of government. However, more firms expect costs and prices to rise as the economy runs closer to full capacity.

To view archived reports click here.

Deeper Insights

In-depth review of topical issues.

Deeper insights

The construction cycle is shifting into a new phase - July 2018
Auckland is now entering a new phase of its construction cycle. An acceleration in home building is occurring at the same time as net migration is cooling. We expect that Auckland will soon be building enough homes to start gradually eating into its housing shortage. Nevertheless, the region will still need a protracted period of rapid home building

Tax and House Prices – How changes to the tax system would impact New Zealand house prices - June 2018
This bulletin provides estimates of how various tax changes would affect house prices, using our Investment Value of Housing model.

Spending up is hard to do – A look at the NZ Government’s Budget responsibility rules
 - 11 May 2018
The New Zealand Government is aiming to reduce net core Crown debt to 20% of GDP within five years. We think it’s on track to meet that target, but perhaps not for the right reasons. Capacity constraints are leading to delays in infrastructure spending – and hence in the borrowing required to pay for it.

Industry Insight – Forestry and Wood Processing - 11 May 2018
This report focuses on New Zealand’s forestry sector which is concerned with the sustainable management of commercially grown softwood forests, the harvesting of these forests at maturity and the processing of harvested logs into primary products, ranging from sawn timber and wood panels (veneers, particleboard and fibreboard) to pulp and paper.

Housing market slowdown to put the brakes on household debt - 30 April 2018
Significant changes in housing market policy are planned over the next few years. We expect that these changes will put a brake on the run up in household debt. They will also have an important impact on household spending and the RBNZ’s policy stance.

Far away, so close - New Zealand inflation to linger below 2% - 23 April 2018
Global inflation is rising, and consumer price inflation in New Zealand is set to pick up over the coming year. However, a sustained lift in inflation to levels close to the RBNZ’s 2% target mid-point is still looking elusive. Several long lasting factors will continue to dampen inflation over the next few years. 

An update on Auckland’s housing shortage and home building - 13 April 2018
Population growth in Auckland has continued to outpace home building, and around a decade of strong construction activity will be required. That is going to be a tough task to achieve. Furthermore, even if home building does rise to the required levels, Auckland’s housing shortage is still going to persist for years to come.

Raising the bar: The impact of NZ’s minimum wage hikes - 12 April 2018
The planned increase in the minimum wage over the next few years to $20/hr will have modest impacts on employment, costs and inflation.

A new era: The RBNZ’s new PTA and governance arrangements - 26 March 2018
A review of the RBNZ’s new Policy Targets Agreement and the announcement of upcoming changes to the RBNZ’s governance arrangements.

NZ Industry Insight - International Education  - 1 February 2018
This report focuses on the international education industry which is concerned with the export of educational services to full fee paying international students coming into New Zealand. 

A look at recent migration trends in New Zealand - 8 December 2017
While still elevated, net migration has turned and it’s set to fall sharply. This will be a significant drag on growth over the coming years.

Transport driving for success October 2017 - 13 October 2017
This bulletin provides a brief assessment of the quality of New Zealand’s road and rail networks.

NZ Industry Insight – Residential Building - 13 September 2017
This report focuses on the residential building industry which is concerned with project managing the construction of dwellings, ranging from standalone houses to high-density apartment blocks.

Home truths - A tale of three cities - 7 April 2017
Pressures in the housing market are one of the largest challenges that the New Zealand economy is currently confronting. In this edition of Home Truths, we look at the varied housing market conditions in New Zealand’s three main centres. While there are some similarities, each is facing its own challenges that they will be wrestling with for years to come.

To view archived reports click here.

Quarterly Economic Overview / Regional Roundup

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

May 2018
At seven years old, New Zealand’s economic expansion is now entering its “mature” phase. Two years ago the economy was really in its prime. Economic growth was 4%, driven by rising house prices, burgeoning construction, population growth, and a strong terms of trade. But the economic cycle is now over the hill.

February 2018
Stats NZ has revised the history of GDP to something that makes more sense. The New Zealand economy was on fire during 2015 and 2016, but slowed in 2017. We expect it will remain slow in 2018 due to a weak housing market and low business confidence. The economy will not be strong enough to generate much inflation, so we expect the OCR to remain on hold until late 2019. Meanwhile, inflation is appearing in the United States, and US interest rates are set to start rising more aggressively. Later this year the US Government may be paying higher interest rates on 10-year bonds than the New Zealand Government. This hasn’t happened since 1994, and will surely have consequences for the exchange rate. 

November 2017
We have made significant changes to our economic forecasts for this Economic Overview, mainly due to the change of government. Government plans to borrow and spend will stimulate the economy, but plans to dampen the housing market and migration will have the opposite effect. We expect the economy to slow in 2018 before gaining momentum in 2019.

August 2017
The New Zealand economy is set to continue growing at a firm pace over the coming year. However, some of the big drivers of activity in recent years have started to dissipate, and we expect that growth will slow to low rates before the decade is out.

May 2017
The New Zealand economy is expected to continue growing at around 3% per annum over the coming years. However, there are some subtle but important changes happening to the mix of factors underpinning growth. At the same time, while inflation looks to be past its lows, the Reserve Bank is under no pressure to raise rates to head off the risk of an overshoot in inflation.

February 2017
New Zealand finds itself in something of a sweet spot right now. The economy has been growing at a steady pace for some time, and a strong pipeline of building work and an improvement in dairy prices will help to keep that momentum going. 

November 2016
Stronger population growth, rising business confidence and a rebound in milk prices point to a more enduring period of growth for the New Zealand economy. Dealing with the growing pipeline of building work will be a significant challenge over the coming years.

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 - 8 May 2018
Economic conditions improved slightly in the latest quarter, with more regions posting higher activity levels than in the preceding quarter. 

Regional Roundup - 18 December 2017
This report assesses recent economic activity in regional New Zealand, providing an outlook for each region.

Regional Roundup - 24 November 2016
The outlook for New Zealand’s regions is generally stronger than it was three months ago on the back of dairy’s recovery, and continued strong population growth.

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.

Consumer & Economic Confidence 2012 - 2018