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Economic note
Don’t get excited by the bounce, it’s not as good as it looks
Friday, 11 December 2015

Key highlights

We expect Q3 GDP growth of 0.8% - a bit of payback after a weak start to the year.
Q3 underpinned by services sector and some temporary boosts from meat processing, transport and wholesale.
Underlying momentum remains modest – we still expect the RBNZ to cut the OCR to 2% around mid-2016.

Report prepared by:

Jane Turner, ASB Senior Economist
Phone: +64 9 301 5853
Email: jane.turner@asb.co.nz

We expect growth of 0.8% in Q3. Relatively robust Q3 growth follows a very weak start to 2015 (on a per-capita basis, the economy actually declined over H1 2015). NZ quarterly GDP is notoriously volatile – we still see an economy with slowing momentum. Current business confidence points to underlying momentum of just 0.5-0.6% per quarter.

We expect Q3 growth will be underpinned by robust services growth although there is a greater degree of uncertainty around services sector growth this quarter due to methodology changes (more on these later). We also expect growth to receive a temporary boost from dairy cow slaughter and ‘payback’ in wholesale trade and transport.

Read the full PDF Report

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