Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ Q3 GDP And November Merchandise Trade

NZ Q3 Gdp And November Merchandise Trade

Data Flash (New Zealand)
NZ Q3 GDP AND NOVEMBER MERCHANDISE TRADE

Key Points - Q3 GDP GDP (production based) increased by +0.7% qoq in Q3, exactly in line with the median market expectation. This outcome is marginally weaker than the +0.8-1.0% qoq expected by the RBNZ.

Revisions to previous data - largely relating to Q4 1999 - meant that the year-on-year growth rate printed at 2.4%, 0.2pps above the median market expectation.

The breakdown of growth amongst the various production sectors was much as expected, with a strong bounce in agriculture - due to the resumption of the dairy season - contributing 0.2pps to growth. Growth in the manufacturing sector also contributed 0.2pps to the result.

Due to problems encountered by Statistics New Zealand while attempting to introduce the revised chain-weighted methodology, no expenditure-based GDP data for Q3 will be published until next year (the date is still to be determined).

Key Points - Merchandise Trade Statistics NZ reported a provisional trade deficit of $466m for the month of November compared with a deficit of $746m in November 1999. The annual deficit fell to $2,636m from $2,917m in October.

The market expectation had been for a deficit of around $360m. Both export and import values printed stronger than market expectations, the latter more so. The estimated level of exports in November was 31.2% higher than a year earlier, while exports for the three months to November were 28.5% higher than a year earlier. We estimate that export prices in Q4 2000 will print a little under 24% higher than a year earlier. Given our expectation for December, growth in export volumes of around 7% yoy is expected in Q4. Detailed export data will be made available with the final trade release on 19 January.

The estimated level of imports in November was 13.2% higher than a year earlier, while imports for the three months to November were 16.5% higher than a year earlier (22.2% higher excluding imports of `lumpy' capital transport equipment). We estimate that import prices in Q4 2000 will print a little under 20% higher than a year earlier, implying that import volumes are flat or falling in yoy terms, in keeping with subdued consumer demand, a sharp decline in building activity, and the increased competitiveness of New Zealand production due to the weak NZD.

Commentary

The outturn for Q3 GDP was in line with our expectation (which was also the market median) but perhaps a little weaker than expected by the RBNZ. However, with confidence indicators rebounding sharply in recent weeks, we suspect that the RBNZ remains comfortable with the broad economic view expressed in its 6 December Monetary Policy Statement, as least as far as the near-term profile for the economy is concerned.

Beyond the near-term, the possibility of a more pronounced slowdown in world activity - especially in the US - continues to pose downside risk to the economic outlook. Although we think that the cyclical position of the New Zealand economy leaves it well-placed to sustain reasonable growth compared to previous slowdowns in the world eonomy, a `hard landing' scenario would clearly have a moderating impact on both export volumes and prices, thus reducing inflation stresses in the economy. Although we would not rule out a rate hike in January, we think it more likely that the RBNZ will want to wait for more evidence of the extent of the slowdown in the US before contemplating the initial 25bp rate hike foreshadowed on 6 December. The strengthening NZD and recent downward revisions to headline inflation for 2001 (the latter largely due to the impact of the treatment of reductions in state house rentals) also argue against an urgent January tightening. Our central forecast remains for a 25bp rate hike on 24 March.

The trade outcome was around $100m weaker than the market was expecting and around $40m weaker than factored into our own forecasts. This error was more than explained by very high oil imports for the month (the excess likely to be unwound next month) and the import of a ship (which if leased, will not impact on the Balance of Payments). Excluding oil and imports of capital transport equipment, the trade balance in November 2000 was around $350m better than a year earlier.

As discussed in previously, we believe that the conditions are now in place for a significant improvement in the current account deficit, driven largely by an improving trade balance. Following the better than expected Q3 outcome, we now expect the annual deficit to fall to between 5.0-5.5% of GDP in Q4 (assisted by the removal of last year's frigate from the annual calculation) and to around 4.5% of GDP by March 2001. Thereafter, we continue to believe that a deficit of below 3% of GDP is achievable within an 18-24 month horizon.

Darren Gibbs, Senior Economist, New Zealand,

This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com

In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website http://www.adobe.com for free.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Media Mega Merger: StuffMe Hearing Argues Over Moveable Feast

New Zealand's two largest news publishers are appealing against the Commerce Commission's rejection of the proposal to merge their operations. More>>

Elsewhere:


Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>

ALSO:


Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>

ALSO:

Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>