New Zealand Insights – September 2019
Growth remains subdued
Employment growth has slowed
Overall inflation still in the sub-2% range
Monetary policy outlook - more to come
Time for fiscal policy to step up
External accounts remain in good shape
Our base case scenario for the New Zealand economy has been a slowdown in growth as capacity constraints emerge, business costs rise and population growth slows. We had previously expected a temporary blip higher in growth in the second half of 2019 on the back of an easing in fiscal policy, but that has been overwhelmed by global developments and continued weakness in business confidence. We are expecting a better domestic growth environment early next year as the global economy picks up. That reflects efforts to stimulate growth through easier monetary policy and an easing of trade tensions closer to the 2020 US election.