N Zealand 2018 GDP likely to bolster case for loose monetary policy

19 March, 2019 12:00 AM printer

SYDNEY: New Zealand's economy likely gathered steam last quarter although annual growth is expected to have slowed further, a Reuters poll of 11 economists showed, reinforcing the case for monetary policy to remain accommodative.

Data due on Thursday is forecast to show New Zealand's gross domestic product (GDP) expanded 0.6 per cent in the three months to the end of December, double the previous quarter's 0.3 per cent. However, the expected acceleration in the quarter would still fall short of the Reserve Bank of New Zealand's (RBNZ) prediction for 0.7 per cent growth, report agencies.

Singapore-based TD Securities, which is forecasting a brisk 1 per cent quarterly pace, says strong household consumption and government and investment spending likely provided a boost last quarter while trade made a small contribution. Construction had been robust too, led by a surprising lift in non-residential activity particularly in Auckland and Waikato, economists said.

Most analysts, however, focused on an expected slowdown in annual growth, saying such an outcome would add to the case for a policy rate cut from current record lows of 1.75 per cent. On an annual basis, New Zealand's NZ$291 billion economy (S$269 billion) likely grew just 2.4 per cent last quarter, according to the Reuters survey, from 2.6 per cent in the September quarter.