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.

August 21
August 14

To view archived reports click here.

Fortnightly Agri Update - 16 August 2017

RBNZ MPS review, August 2017 – A matter of time - 10 August 2017
The RBNZ expects to keep interest rates low for a long time in order to generate a sustained lift in inflation. We now expect OCR hikes to be delayed until the end of 2019.

Monetary Policy Statement preview, August 2017 - 4 August 2017
The RBNZ may well surprise markets by emphasising the recent run of weak data and the high exchange rate. The RBNZ will probably reiterate that it is not considering OCR hikes within the foreseeable future.

NZ labour market review, June quarter 2017 - 2 August 2017
June’s labour market figures were very close to market expectations. Unemployment fell to 4.8% (down from 4.9%). Looking through quarter-to-quarter volatility, the economy looks to be expanding at a moderate pace.

Fortnightly Agri Update - 2 August 2017

NZ labour market preview, June quarter 2017 - 28 July 2017
New Zealand’s June quarter labour market figures are expected to show that employment is continuing to rise, underpinned by firm economic activity. However, growing labour force participation means that the unemployment rate is expected to remain at 4.9%.

Fortnightly Agri Update - 19 July 2017

NZ CPI review Q2 2017 – Been and gone - 18 July 2017
The jump in March quarter consumer prices was followed by a muted June quarter, taking annual inflation down to 1.7%.

NZ CPI preview, June quarter 2017 - Back down below - 13 July 2017
After a strong March quarter outturn, we expect a subdued 0.1% rise in consumer prices over the June quarter, taking annual inflation down to 1.8%.

Fortnightly Agri Update - 5 July 2017

NZ Regional Economic Confidence, June quarter 2017 - 28 June 2017
Regional economic confidence improved in most parts of New Zealand in the June quarter. However, confidence has continued to slide in the Auckland region, and remains below its highs in Canterbury.

RBNZ OCR review, June 2017 – A statement of neutrality - 22 June 2017
The RBNZ remains in a firmly neutral stance, with recent developments having a balanced impact on the inflation outlook. We expect no change in the OCR until 2019.

Fortnightly Agri Update - 21 June 2017

NZ Westpac McDermott Miller Consumer Confidence, June quarter 2017 - 19 June 2017
June saw widespread gains in consumer confidence. However, spending appetites have softened. Households don’t seem worried about debt repayment, despite high levels of debt.

RBNZ OCR preview, June 2017 – Firmly, firmly neutral - 16 June 2017
We expect the RBNZ to hold the OCR at 1.75% and reaffirm its neutral bias. The starting point for the economy is softer than expected, and the recent jump in inflation will be regarded as temporary.

NZ Q1 GDP review – Coming up short again - 15 June 2017
GDP fell short of expectations again, rising by 0.5% in the March quarter. Some of the weakness is likely to be temporary, but the broader picture is that growth per-person remains quite modest.

NZ current account, Q1 2017 – No cause for alarm - 14 June 2017
New Zealand’s current account deficit widened in the March quarter, but some of the drivers appear to be temporary and the nation’s funding requirement remains manageable.

NZ Local Knowledge - 13 June 2017
A reasonably strong set of activity indicators for April, but the pace of growth is past its peak.

NZ Q1 GDP and BoP preview – There and back again - 9 June 2017
We expect a 0.8% rise in GDP for the March quarter, as dairy and mining output rebound from a weak December quarter. The current account deficit is expected to widen as weak export volumes outweigh higher prices.

Fortnightly Agri Update - 7 June 2017

NZ building work put in place, March 2017 quarter - 6 May 2017
Construction softened in early 2017, while cost pressures continue to mount.

NZ Budget 2017 review - 25 May 2017
Having your cake and eating it too.

Budget 2017 First Impressions - 25 May 2017
Having your cake and eating it too.

NZ Budget 2017 preview – More of everything - 24 May 2017
A stronger tax take means room for both more spending and larger surpluses.

Fortnightly Agri Update - 17 May 2017

RBNZ May 2017 Monetary Policy Statement review - 11 May 2017
The RBNZ left the OCR unchanged in May, and continued to signal an extended period of low rates.

NZ Local Knowledge - 10 May 2017
Activity indicators were mixed in March. Growth in household spending looks to have lost some momentum, while building consent issuance and agriculture production have recovered from slumps late last year.

RBNZ MPS preview, May 2017 – A new challenge - 5 May 2017
We expect the Reserve Bank to hold the OCR at 1.75%, but with a stronger signal that the next move in rates will be up.

NZ labour market review, March quarter 2017 - 3 May 2017
New Zealand’s unemployment rate fell to 4.9% in the March quarter, a lower level than analysts had expected. This was underpinned by firm employment growth.

Fortnightly Agri Update - 3 May 2017

NZ Q1 labour market preview - 27 April 2017
Jobs growth is expected to remain firm in Q1. However, increases in the labour force means the unemployment rate will remain steady. Wage growth remains modest.

NZ CPI review Q1 2017 – Inflation pulse strengthening - 20 April 2017
The underlying pace of inflation in New Zealand is picking up, although the headline inflation rate overstates how quickly and abruptly this has happened.

Fortnightly Agri Update - 19 April 2017

Early arrival - NZ CPI preview, Q1 2017 - 13 April 2017
We expect annual inflation to reach 2% in the March quarter, boosted by the rebound in world oil prices and a temporary jump in food prices.

NZ Local Knowledge - 10 April 2017
Activity indicators were subdued in February, after moderate results in recent months. Trends in agriculture production have improved and sentiment in the services sector remains upbeat, while the housing market has flattened off.

Fortnightly Agri Update - 5 April 2017

NZIER Quarterly Survey of Business Opinion, March quarter 2017 - 4 April 2017
Firms remained upbeat about their own activity in the March quarter, indicative of a decent pace of economic growth through the first half of this year. Pricing intentions rose for a second quarter, but we view these increases as consistent with a pick-up in inflation to moderate levels rather than a sustained over-shoot of the Reserve Bank’s target.

RBNZ OCR Review, March 2017 - Hold the line - 23 March 2017
The Reserve Bank left the Official Cash Rate unchanged at 1.75% and maintained that interest rates will remain low for a considerable time. Near-term inflation is shaping up stronger than expected, but the RBNZ seems to share our view that this is due to temporary factors.

Fortnightly Agri Update - 22 March 2017

RBNZ OCR preview, March 2017 – The little engine that could? - 17 March 2017
We expect the RBNZ to hold the OCR at 1.75% and maintain a neutral bias. Near-term inflation is looking a bit stronger, but recent data casts some doubt on whether the economy is running strong enough to generate a sustained lift in inflation. 

Q4 GDP-Review-March-2017 - 16 March 2017
GDP rose by 0.4% in the December quarter, led by gains in services which are benefitting from the growing population base. 

Q4 BOP-Review-March-2017 - 15 March 2017
The current account narrowed to 2.7% of GDP in the year to December. 

Easing back – NZ GDP and Current Account Preview, Q4 2016 - 10 March 2017
We expect a modest 0.5% rise in December quarter GDP, with declines in primary production and manufacturing weighing on growth. A rebound in tourism exports and lower import prices are likely to have narrowed the current account deficit.

Fortnightly Agri Update - 8 March 2017

NZ construction activity continuing to climb - 3 March 2017
Construction activity continued to increase in December quarter, with widespread gains. We expect construction levels will remain strong for some time.

Fortnightly Agri Update - 22 February 2017

NZ Q4 retail sales review - 17 February 2017
The December quarter saw only a moderate gain in retail spending, with sales volumes up 0.8%. While spending growth in the past two quarters has been on the soft side, this follows strong gains earlier in the year. Over the year as whole, we saw a solid 4% lift in spending volumes.

RBNZ February 2017 MPS review - 9 February 2017
At its February interest rate decision, the Reserve Bank kept the Official Cash Rate at 1.75%. We expect the OCR to remain on hold for an extended period.

Fortnightly Agri Update - 8 February 2017

NZ Local Knowledge - 7 February 2017
Activity indicators were mixed in December, consistent with a solid but not spectacular end to the year for GDP growth. But with population growth continuing to run hot, the picture on a per-capita basis remains much more moderate.

RBNZ MPS preview, February 2017 – No need for further action - 2 February 2017
We expect the RBNZ to hold the OCR at 1.75% and maintain a neutral bias. Inflation is finally back within the target range but will struggle to pick up much further this year. And financial conditions have already tightened significantly since November. 

NZ Q4 2016 labour market review - The force is strong with this one - 1 February 2017
NZ unemployment rose by more than expected in Q4 as the labour force continued to grow. Jobs growth was slightly stronger than expected, however wage growth remains muted. 

Tis the season - NZ Consumer Price Index review, Q4 2016 - 26 January 2017
Annual inflation has finally lifted back within the RBNZ’s target band. However, we suspect that some of the December quarter’s strength will be short-lived, and that inflation will struggle to push much higher over 2017.

NZ Q4 labour market preview - 25 January 2017
We’re expecting to see further growth in employment in December on the back of firm economic activity.

Getting the band back - NZ Consumer Price Index preview, Q4 2016 - 19 January 2017 
We expect annual inflation to rise to 1.2% in the December quarter, bringing it back within RBNZ’s target band for the first time in more than two years.

Fortnightly Agri Update - 18 January 2017

Pause for breath – NZIER Quarterly Survey of Business Opinion, December quarter 2016 - 17 January 2017
Business confidence and firms’ expectations for their own activity eased back in the December quarter, but remain at levels consistent with a continuation of solid economic growth. There was a notable rise in firms’ pricing intentions, although underlying price pressures look a bit softer than the headline figures suggest.

To view archived reports click here.

In-depth review of topical issues.

Deeper insights

  • 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.
  • NZ Industry Insights – Meat and Wool - 8 November 2016
    The meat and wool sector faces a number of challenges including processing overcapacity, a modest outlook for lamb and wool products, and the perennial question of how to maximise dollars per kilogram of product.
  • NZ Industry Insights – Healthcare and Social Support Services - 6 October 2016
    The healthcare and social support services sector is growing rapidly. Public expectations of the sector will continue to outstrip available funds.

  • A look at New Zealand retail spending by region - 29 September 2016
    Retail spending in New Zealand has been trucking along. Over the past year sales rose by 4.5% in nominal terms, and they’re up 18% since 2012. However, there are stark differences across the economy. In this report, we look at how spending has been shaping up in different parts of the country.
  • NZ Industry Insights: Māori in the New Zealand economy - 6 September 2016
    Māori are facing a period of incredible opportunity for economic growth, with a young and growing population, and increasing economic scale at the collective and SME level.

  • 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.

To view archived reports click here.

Quarterly Economic Overview

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

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 - 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.