Downside risks to NZ’s growth outlook accumulate

New Zealand’s provincial economies are poised to drive growth in the economy, building on the recovery in dairy prices during 2016, according to Infometrics latest economic forecasts. Spending activity in the regions is comfortably outpacing activity in the main centres, with commodity prices for most exports holding at high levels.

Media Release: Provincial New Zealand dominates economic growth prospects

New Zealand’s provincial economies are poised to drive growth in the economy, building on the recovery in dairy prices during 2016, according to Infometrics latest economic forecasts. Spending activity in the regions is comfortably outpacing activity in the main centres, with commodity prices for most exports holding at high levels.

New Zealand’s economic outlook turns

Economic growth during 2018 is set to fall short of previous expectations, according to Infometrics’ latest forecasts. Infometrics sees economic growth slowing from 3.0%pa currently to 2.6%pa in early 2019, contrasting with the forecaster’s previous expectation of accelerating growth during 2018.
“Labour capacity constraints in the residential construction sector, changes in central government’s infrastructure priorities, and slightly disappointing dairy prices will all weigh on growth this year,” says Infometrics Chief Forecaster Gareth Kiernan.

Better growth in 2018 to prelude a more challenging next decade

Infometrics’ latest forecasts show the New Zealand economy still has more gas in the tank for 2018, despite the slowdown of the last 12 months and suggestions from some analysts that all the economy’s key drivers have already peaked. Infometrics’ Chief Forecaster Gareth Kiernan points to a buoyant export sector, increased government spending, and the perennial need to build more houses in Auckland as the key components of GDP growth averaging 3.4%pa during 2018 and 2019.

Lower house prices to slow economic growth in 2017

Infometrics’ latest forecasts show house prices falling in the second half of 2017, as the flow-on effects of tighter mortgage lending conditions and higher interest rates dampen demand. The emergence of flat or falling house prices within the next few years will undermine consumers’ willingness to spend, while the discretionary portion of households’ budgets will be squeezed as interest rates gradually rise from their historic lows.