NZ: Q3 GDP rose 0.6%, big upward revisions to history - Westpac

Michael Gordon, Senior Economist at Westpac, notes that NZ GDP rose 0.6% in the September quarter, ahead of their forecast, while data revisions have substantially increased the reported rate of growth over the last few years.

Key Quotes

“New Zealand’s GDP rose 0.6% in the September quarter. This was in line with the median market forecast, but stronger than our expectation of a 0.4% rise. Growth was revised up by 0.2% in each of the previous two quarters.”

“Construction made the biggest contribution to growth in the September quarter. Output rose by 3.6%, reversing the decline seen over the first half of this year.”

“There were also surprisingly strong gains in transport (+1.4%) and mining (+3.2%), and an unexpected 0.2% rise in agricultural output despite a sharp drop in milk production in the quarter.”

“The annual benchmarking of the GDP figures has resulted in significant upward revisions to growth over the last few years. GDP growth is now reported to have peaked at 4% in the 2016 calendar year.”

“The new figures present a more stable picture of per-capita growth over the last few years – GDP growth has accelerated as population growth has risen. They still indicate a slowdown in growth over 2017 – but this could be subject to future revisions as well.”

“The upward revisions to GDP will have implications for monetary policy. To some degree they suggest a higher rate of potential growth than previously thought – we know that inflation was subdued over much of the revision period. But they also suggest that the New Zealand economy may be closer to full capacity than thought.”

“The NZD/USD rose 1/3 of a cent on today's data, and the NZD/AUD rose 1/2 cent.”