NZ Institute of Economic Research (Inc)
Media release 16 September 2013

Consensus Forecasts
Sustained but gradual recover...
Real GDP Growth

Slow and steady recovery

Economic growth will accelerate from 2.5% in
2013 to 2.6% and 3.0% in the follo...
Annual Consumer Price Inflation

Slowly rising inflation
Annual average % change

Consumer price inflation will lift from ...
Table 1 Previous and latest consensus forecasts

aapc, March years
GDP
Private consumption
Public consumption
Fixed invest...
Table 2 Quarterly forecasts for GDP & CPI
qpc, quarters
GDP (seasonally adjusted, qpc)
CPI (qpc)

Low
-0.2

Jun-13 f
Mean
...
Summary charts
Real GDP Growth

Real Private Consumption
7

5
Maximum

4

3
2
Minimum

1
0
-1

Annual average % change

An...
NZD TWI

Annual Consumer Price Inflation
85

Maximum

3
2
1

Minimum

0

75
70

60
55

2006

2009

2012

2015

45
1997
200...
Quarterly Consumer Price Inflation

Government Operating Surplus
6

10

5

$bn

0
-5
Minimum

-10
-15
1997
2000
2003
Sourc...
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NZIER - Consensus forecasts - September 2013

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NZ Institute of Economic Research (Inc) Media release 16 September 2013
Consensus Forecasts: Sustained but gradual recovery

The NZIER Consensus Forecasts are an average of New Zealand economic forecasts compiled from a survey of financial and economic agencies. These are not NZIER’s forecasts. The average forecasts do not necessarily represent the views of individual participants. Forecasts are for March years, e.g. 2014 refers to the year ended March 2014.

The New Zealand economy is recovering from the recession. The latest NZIER Consensus Forecasts predict further gradual economic growth.

Economic growth will pick up over the next two years, boosted by the Canterbury rebuild and a gradual underlying recovery. Economic growth will average 2.6% over the next three years, better than the past three years (at 1.0% per year), but slower than the 2001-2008 period (3.0% per year).

The drought will flatten export growth in 2014, but economic growth will remain sound as other parts of the economy grow.

The labour market will improve further. There will be more jobs, fewer unemployed and wages will grow, albeit slower than previously forecast.

Inflation will pick up to 2.4% by 2016, up from less than 1% now. Inflation though will remain in the RBNZ’s 1%-3% target band. Interest rates will rise gradually from early 2014.

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Transcript of "NZIER - Consensus forecasts - September 2013"

  1. 1. NZ Institute of Economic Research (Inc) Media release 16 September 2013 Consensus Forecasts Sustained but gradual recovery The NZIER Consensus Forecasts are an average of New Zealand economic forecasts compiled from a survey of financial and economic agencies. These are not NZIER’s forecasts. The average forecasts do not necessarily represent the views of individual participants. Forecasts are for March years, e.g. 2014 refers to the year ended March 2014. The New Zealand economy is recovering from the recession. The latest NZIER Consensus Forecasts predict further gradual economic growth. Economic growth will pick up over the next two years, boosted by the Canterbury rebuild and a gradual underlying recovery. Economic growth will average 2.6% over the next three years, better than the past three years (at 1.0% per year), but slower than the 2001-2008 period (3.0% per year). The drought will flatten export growth in 2014, but economic growth will remain sound as other parts of the economy grow. The labour market will improve further. There will be more jobs, fewer unemployed and wages will grow, albeit slower than previously forecast. Inflation will pick up to 2.4% by 2016, up from less than 1% now. Inflation though will remain in the RBNZ’s 1%-3% target band. Interest rates will rise gradually from early 2014. Figure 1 Gradual acceleration in economic growth Consensus GDP growth forecasts 6% Annual average percentage change Actual Sep-12 forecasts Sep-13 forecasts 5% 4% 3% 2% 1% 0% -1% -2% -3% 2000 2003 Source: Statistics NZ, NZIER 2006 2009 2012 2015
  2. 2. Real GDP Growth Slow and steady recovery Economic growth will accelerate from 2.5% in 2013 to 2.6% and 3.0% in the following two years before easing off slightly in 2016 to 2.3%. Economists expect GDP growth of 0.2% in the June 2013 quarter. Annual average % change The economy is growing at a gradual pace. The Canterbury rebuild is a key driver. There is also a broadening gradual recovery across the economy. The drought will flatten exports for a year. 6 5 3 2 Minimum 1 0 -1 -2 -3 1997 2000 2003 Source: Statistics NZ, NZIER 2006 Annual average % change -40 1997 2000 2003 Source: Statistics NZ, NZIER 40 Maximum 30 20 10 0 Minimum -10 -20 -30 Annual average % change Exchange rate to remain high 2012 2015 8 6 Maximum 4 2 0 -2 Minimum 2006 2009 2012 2015 NZD TWI 85 Maximum Index, annual average 80 75 70 Minimum 65 60 55 50 45 1997 2000 Source: RBNZ, NZIER NZIER Consensus Forecasts 2009 10 -4 1997 2000 2003 Source: Statistics NZ, NZIER Exporters should plan for a high exchange rate for some time. A high exchange rate favours imports. 2006 Real Exports Exports affected by drought Despite recent weakening, the NZD will continue to remain elevated for some time. On a trade weighted basis, the dollar is expected to be higher than previously thought. 2015 50 Other investment, mainly by businesses, will also accelerate over the next three years. The outlook for exports after the drought is for steady growth of around 2.6% per year. 2012 60 Residential investment will surge by 24.8% and 17.0% in 2014 and 2015 respectively. The pace will be a slower but still strong at 8.4% in 2016. The drought will flatten exports in 2014. There is a wide divergence of views, from a small impact to a short-sharp dip in exports. 2009 Real Residential Investment Accelerating investment The Canterbury rebuild continues to lift investment. Forecasters expect a surge of reconstruction to occur in the next year. Maximum 4 2003 2006 2009 2012 2015 2
  3. 3. Annual Consumer Price Inflation Slowly rising inflation Annual average % change Consumer price inflation will lift from less than 1% currently, to 2.4% by 2016. The acceleration is gradual and inflation will remain within the RBNZ’s 1-3% target band. 5 4 Maximum 3 2 1 Minimum 0 -1 1997 2000 2003 Source: Statistics NZ, NZIER Interest rate increases from 2014 Longer term interest rates will also rise over the forecast horizon. 8 7 % Pa 6 Maximum 5 4 3 2 Minimum 1 0 1997 2000 Source: RBNZ, NZIER 2003 2006 2009 2012 2015 Unemployment Rate 8 Maximum 7 6 5 Minimum 4 3 1997 2000 2003 Source: Statistics NZ, NZIER 2006 2009 2012 2015 Government Operating Surplus Fiscal surplus in 2015 10 Maximum 5 $bn The government operating deficit will narrow over the next three years with consensus forecasting a return to surplus by the end of 2015, matching the government’s stated goal in the May 2013 Budget. 2015 9 Annual average % change Wages will grow at a reasonable pace over the next three years (2.9% on average), but slightly lower than in the June survey (3.1%). 2012 90 Day Bank Bills Improving labour market The labour market is slowly improving. The unemployment rate will fall from a peak of 6.8% over the next three years. 2009 10 Interest rates will lift from early 2014. By 2016, forecasters expect between a 1.5% point and a 1.7% point increase in the 90 day bank bill rate. On average, the 90 day bank bill rate is forecast to increase from 2.6% in 2013 to 2.7%, 3.4% and 4.1% in 2014, 2015 and 2016 respectively. 2006 0 -5 Minimum -10 -15 1997 2000 2003 Source: Treasury, NZIER NZIER Consensus Forecasts 2006 2009 2012 2015 3
  4. 4. Table 1 Previous and latest consensus forecasts aapc, March years GDP Private consumption Public consumption Fixed investment: Residential Other Total Exports, goods & services Imports, goods & services Consumer price index (apc) New Zealand TWI (ave yr to Mar) 90 day bank bill (ave yr to Mar) 10 year govt bond (ave yr to Mar) Current account balance (NZ$m; Mar yr) Employment Unemployment (% of labour force) Wages (private sector avg hourly earnings) Government operating balance (NZ$m, June yr) 2013/14 f 2.6 3.3 0.2 24.8 7.3 11.1 0.7 6.1 1.7 75.6 2.7 4.2 -10,195 2.1 6.0 2.6 -1,555 Sep-2013 survey 2014/15 f 3.0 2.8 0.5 17.0 7.5 9.4 3.4 5.2 2.2 74.1 3.4 4.6 -12,636 2.0 5.5 3.1 529 2015/16 f 2.3 2.1 0.6 Jun-2013 survey 2013/14 f 2014/15 f 2015/16 f 2.7 3.1 2.3 3.0 2.7 2.1 0.0 0.3 0.6 8.4 3.5 4.5 3.1 3.0 2.4 72.2 4.1 5.0 -13,255 1.2 5.3 3.2 1,589 22.7 9.4 12.2 0.0 5.3 1.6 77.3 2.7 3.8 -10,557 1.8 6.0 2.7 -1,633 14.8 5.7 7.6 3.3 4.6 2.1 76.0 3.4 4.4 -13,045 2.0 5.5 3.1 395 6.4 2.8 3.5 3.1 2.7 2.3 73.8 4.1 4.9 -13,586 1.1 5.3 3.3 1,822 Source: NZIER (Note: aapc = annual average percent change, apc = annual percent change, arrows refer to direction of change from last survey) NZIER Consensus Forecasts 4
  5. 5. Table 2 Quarterly forecasts for GDP & CPI qpc, quarters GDP (seasonally adjusted, qpc) CPI (qpc) Low -0.2 Jun-13 f Mean 0.2 High 0.4 Low 0.4 0.4 Sep-13 f Mean 0.9 0.7 High 3.8 3.6 2.6 Low 1.9 1.0 0.3 2015/16 f Mean 2.3 2.1 0.6 21.3 11.0 12.4 4.6 6.8 2.5 76.5 4.0 5.1 -9,300 2.8 6.2 3.6 2,905 2.0 1.9 2.2 2.3 1.9 2.0 68.9 3.3 4.6 -15,200 0.8 4.8 2.7 19 8.4 3.5 4.5 3.1 3.0 2.4 72.2 4.1 5.0 -13,255 1.2 5.3 3.2 1,589 High 1.4 0.9 Low 0.6 -0.1 Dec-13 f Mean 0.9 0.2 High 1.1 0.4 High 2.8 2.9 0.8 15.3 5.6 7.5 4.3 4.9 2.8 74.6 4.7 5.6 -10,000 1.8 5.9 3.7 3,015 Source: NZIER (Notes: qpc = quarterly percent change) Table 3 Summary of results – June 2013 survey aapc, March years GDP Private consumption Public consumption Fixed investment - Residential - Other - Total Exports, goods and services Imports, goods and services Consumer price index (apc) New Zealand TWI (ave yr to Mar) 90 day bank bill (ave yr to Mar) 10 year government stock (ave yr to Mar) Current account balance (NZ$m; Mar yr) Employment Unemployment rate (% of labour force) Wages (private sector avg hourly earnings) Government operating balance (NZ$m, June yr) Low 2.4 2.7 -0.6 2013/14 f Mean 2.6 3.3 0.2 High 2.8 3.6 0.9 Low 2.2 2.1 -0.3 2014/15 f Mean 3.0 2.8 0.5 18.0 3.7 7.2 -2.8 4.9 1.4 74.4 2.5 4.0 -11,780 1.4 5.7 2.1 -2,500 24.8 7.3 11.1 0.7 6.1 1.7 75.6 2.7 4.2 -10,195 2.1 6.0 2.6 -1,555 29.9 14.8 19.7 3.3 7.6 1.9 77.0 2.8 4.6 -8,500 3.2 6.3 3.1 560 9.0 3.6 5.8 1.6 4.0 1.9 71.4 3.1 4.4 -15,270 1.3 4.8 2.5 -1,000 17.0 7.5 9.4 3.4 5.2 2.2 74.1 3.4 4.6 -12,636 2.0 5.5 3.1 529 Source: NZIER (Notes: aapc = annual average percent change, apc = annual percent change, qpc = quarterly percent change. These results show only means; standard deviations are available on request.) NZIER Consensus Forecasts 5
  6. 6. Summary charts Real GDP Growth Real Private Consumption 7 5 Maximum 4 3 2 Minimum 1 0 -1 Annual average % change Annual average % change 6 -2 -3 1997 2000 2003 Source: Statistics NZ, NZIER 2006 2009 2012 2015 6 5 Maximum 4 3 2 1 Minimum 0 -1 -2 -3 1997 2000 2003 Source: Statistics NZ, NZIER Real Public Consumption Minimum 2009 2012 Annual average % change 2015 2015 5 Minimum 0 -5 -10 2006 2009 2012 2015 40 Maximum 30 20 10 0 Minimum -10 -20 -30 2006 2009 2012 Real Total Investment Maximum 10 50 -40 1997 2000 2003 Source: Statistics NZ, NZIER 2015 Maximum 20 Annual average % change 2006 Annual average % change Maximum Real Other Investment 15 10 5 Minimum 0 -5 -10 -15 1997 2000 2003 Source: Statistics NZ, NZIER Real Exports 2006 2009 2012 2015 Real Imports 15 8 10 6 Maximum 4 2 0 -2 -4 1997 2000 2003 Source: Statistics NZ, NZIER NZIER Consensus Forecasts Minimum 2006 2009 2012 2015 Annual average % change 10 Annual average % change 2012 Real Residential Investment 15 -15 1997 2000 2003 Source: Statistics NZ, NZIER 2009 60 Annual average % change 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 1997 2000 2003 Source: Statistics NZ, NZIER 2006 Maximum 5 0 Minimum -5 -10 -15 1997 2000 2003 Source: Statistics NZ, NZIER 2006 2009 2012 2015 6
  7. 7. NZD TWI Annual Consumer Price Inflation 85 Maximum 3 2 1 Minimum 0 75 70 60 55 2006 2009 2012 2015 45 1997 2000 Source: RBNZ, NZIER 2006 2009 2012 2015 9 9 8 8 7 7 Maximum Maximum 5 4 % Pa 6 6 % Pa 2003 10 Year Government Bond Yield 90 Day Bank Bills 10 5 4 3 3 2 2 Minimum 1 1 0 1997 2000 Source: RBNZ, NZIER 2003 2006 2009 2012 2015 2003 2006 2009 2012 2015 Employment Growth Current Account Balance 4 -4 -6 -8 Maximum -10 -12 -14 -16 Minimum -18 2003 2006 2009 2012 2015 Annual average % change Maximum -2 -20 1997 2000 Source: RBNZ, NZIER Minimum 0 1997 2000 Source: RBNZ, NZIER 0 Annual, $bn Minimum 65 50 -1 1997 2000 2003 Source: Statistics NZ, NZIER 3 2 1 0 2009 2012 2015 6 6 5 Minimum 4 2006 2009 2012 2015 Annual average % change Maximum 7 NZIER Consensus Forecasts 2006 Private Sector Wage Inflation Unemployment Rate 3 1997 2000 2003 Source: Statistics NZ, NZIER Minimum -1 -2 1997 2000 2003 Source: Statistics NZ, NZIER 8 Annual average % change Maximum 80 4 Index, annual average Annual average % change 5 Maximum 5 4 3 2 Minimum 1 0 1997 2000 2003 Source: Statistics NZ, NZIER 2006 2009 2012 2015 7
  8. 8. Quarterly Consumer Price Inflation Government Operating Surplus 6 10 5 $bn 0 -5 Minimum -10 -15 1997 2000 2003 Source: Treasury, NZIER Annual % change Maximum 5 4 Maximum 3 2 1 Minimum 0 2006 2009 2012 2015 -1 1997 2000 2003 Source: Statistics NZ, NZIER 2006 2009 2012 2015 Respondents For further information please contact: ANZ-National Bank ASB Bank Bank of New Zealand Deutsche Bank First NZ Capital Goldman Sachs New Zealand Institute of Economic Research Reserve Bank of New Zealand The Treasury Westpac Shamubeel Eaqub (04) 470 1810 021 573 218 Shamubeel.Eaqub@nzier.org.nz NZIER Consensus Forecasts 8

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