NZ GDP: Annual growth eased to 2.6%/y - TDS

Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, notes that New Zealand’s September quarter GDP rose by +0.3%/q, underwhelming all expectations, while annual growth eased from 3.2% to 2.6%/y.

Key Quotes

“Trading is thin given the time of year, but the OIS strip is around 15% priced for a cut by Q3 2019. While GDP today was disappointing, Jun qtr GDP rose by +1.0%/q and early tracking is for a +0.7%/q rebound for Dec qtr, and so we need to look through the volatility.”

“2018-19 growth is expected to be around trend at 3%, inflation is sitting around 2%/y, and maximum sustainable employment has been achieved, so no need for a cut.”

“TD expects the OCR to remain at 1.75% through to November 2019, with risks of slippage into 2020 if the Governor insists on keeping the cash rate unchanged through 2019 and 2020 no matter what the data outcomes are.”