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


ASB Bank Economic Forecasts - Key Points

ASB Bank Economic Forecasts

key points

1. The lack of economic growth during the March quarter came as a surprise. However we are confident that the June quarter (and subsequent quarters) will show an improvement for the following reasons:
* Dairy and tourism will continue to underpin growth. The flow-on effects of higher rural incomes have only started to feed through the rural sector, and have still to impact on the economy.
* Low interest rates should support an improvement in retail sales.
* The construction sector should start to make a positive contribution to GDP.

The global economy continues to pose a risk for domestic growth, and so does confidence, which remains fragile. Looking further ahead, the global risk is reducing. The US and Australian economies have shown signs of turning the corner. Most major countries are expected to record an improvement next year.

2. Given the lacklustre performance of the domestic economy as well as the risks associated with the global slowdown, we believe that the easing in monetary conditions this year was appropriate. However, further cuts in the OCR are no longer considered necessary. The Reserve Bank is expected to start raising the OCR early next year as it seeks to unwind current stimulatory conditions.

3. The Reserve Bank faces several challenges in its bid to keep inflation within its 0-3% target. The migrant outflow poses a risk for inflation from several fronts - both through its impact on skill shortages and wages growth; and also through its downward influence on NZ's sustainable, non-inflationary economic growth rate.

4. The NZ dollar's performance has been disappointing. Although Australian dollar weakness has been the source of most of the downward pressure on the NZ dollar during recent years, some of it is also attributable to domestic factors. NZ's country risk premium has risen steadily since the last election, impacting on the currency and our long term interest rates.

However, fundamentals remain strongly in the NZ dollar's favour. We expect the NZ dollar to appreciate against the US dollar during the next few years, albeit to a modest extent. However the crossrate against the Australian dollar is likely to weaken slightly.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Manawatu-Whanganui Projects: PGF Top-Up To Rural Broadband Roll-Out

The government has effectively raided the $3 billion Provincial Growth Fund to top up the budget for the second phase of its rural broadband initiative, filling in mobile 'black spots' and ensuring broadband is available to marae that don't have access now. More>>


Other Windy Cities: Auckland-Chicago Named A Top 10 ‘Most Exciting’ New Route

The inclusion of Auckland-Chicago on Lonely Planet’s Where to fly in 2019? The 10 most exciting new flight routes list comes just two weeks before Air New Zealand prepares to celebrate its inaugural flight to Chicago’s O’Hare International Airport on 30 November. More>>

Deadly Strain: ESR Ups Its Reporting On Meningococcal Disease

The increasing number of cases of Group W Meningococcal disease (MenW) has prompted ESR to increase its reporting on the disease to the Ministry of Health. ESR has upped its reporting to weekly. More>>


Very Small Things: "Game-Changing" 3D Printing Technology Launched

New Zealand microfabrication researchers Andrea Bubendorfer and Andrew Best, the co-inventors of a new way of fabricating very small things with Laminated Resin Printing (LRP), are part of Callaghan Innovation’s MicroMaker3D team launching the new patent pending technology in the US this week. More>>