NZ Economy Barely Grins in Q2, Limiting RBNZ Rate Hike Plans
New Zealand's economy is expected to have barely grown in the second quarter, which may limit the Reserve Bank of New Zealand's (RBNZ) ability to raise interest rates soon. The RBNZ has signaled that it can delay its next Official Cash Rate move until December, citing ongoing uncertainty. A flat quarterly growth rate of 0.0% is forecast by the RBNZ itself, while ANZ Research estimates a slightly firmer 0.1% q/q print.
The annual growth rate is expected to firm up to around 2.1% to 2.2%, up from 1.5% in the first quarter. However, higher fuel prices are weighing on discretionary spending and broader consumer confidence through the June quarter. Sectors exposed to this pullback, including transport and tourism, are tipped to have gone backwards.
Offsetting that drag, ANZ points to a pickup in construction activity off recent lows and continued growth in several business-facing services industries. The balance of payments data, due a day earlier, is expected to show the annual current account deficit widening by around 0.3 percentage points to 3.9% of GDP.