Economic growth data for Q3 2024 is due from New Zealand at 2145 GMT, which is 1645 US Eastern time.
New Zealand's economic performance in the first half of 2024 was modest, with small changes in GDP.
First quarter (Q1) 2024:
- GDP growth: The economy saw a 0.2% increase in GDP in the March 2024 quarter, reversing a 0.1% decline in the December 2023 quarter.
Second Quarter (Q2) 2024:
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GDP reduction: In the June 2024 quarter, GDP contracted 0.2%, with GDP per capita decreasing 0.5%.
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Annual Outlook: For the year ending June 2024, GDP declined 0.5%, and GDP per capita fell 2.7%.
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Department Performance: The contraction was due to declines in several key industries, including retail trade, accommodation, agriculture, forestry, fishing, and wholesale trade.
Q3 data is expected to show continued contraction, despite the Reserve Bank of New Zealand (RBNZ) implementing a series of interest rate cuts, reducing the Official Cash Rate (OCR) from 5.5% in August to 4.25% before November, and now until 4.25. % in December. The impact on Q3 2024 GDP data is likely to be limited due to delays in the rollout of substantive policy and concurrent economic challenges. The full benefits of these monetary policy changes are expected to materialize in subsequent quarters.
Economists suggest that the September quarter may represent the low point of the current economic cycle. There is hope for some recovery in the December quarter, with stronger growth expected to emerge in 2025 as the effects of RBNZ monetary easing become more pronounced. The expected recovery is expected to be supported by increased consumer spending and business investment, boosted by lower borrowing costs.
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Immediate effects: The transmission of monetary policy to the wider economy usually involves delays. Since the most recent rate cuts occurred in Q3, their full impact may not be immediately reflected in the GDP figures for this quarter. However, early signs suggest that sectors sensitive to interest rates, such as construction and manufacturing, have begun to stabilise.
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Regional Performance: Despite the rate cuts, the economy faced challenges in Q3. Analysts had expected a decline of about 0.4% in GDP for the September quarter, with declines seen in construction, wholesale trade, and manufacturing. The energy crisis had a negative impact on these regions during the winter months, adding to the already existing economic pressure.
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Consumer Spending and Business Investment: Although lower interest rates are designed to encourage spending and investment, the immediate response from consumers and businesses has been cautious. High levels of household debt and global economic uncertainty have led to limited spending, which may reduce the short-term stimulus effect of the rate cuts.
