FXStreet (Delhi) – Mark Smith, Senior Economist at ANZ, notes that the NZ economy is heading southwards with annual growth easing to 2.4%, the lowest rate since the end of 2013, with annual growth in per-capita GDP the lowest in four years.

Key Quotes

“The 0.4% quarterly rise in Q2 GDP was weaker than the median market expectation and the RBNZ’s pick (0.6%). The broader production components showed a mixed performance over the quarter, with primary industries GDP rising 2.1%, a 0.4% rise in the goods sector, and a 0.5% rise in services sector value added.”

“The data confirmed a generalised slowdown is occurring, although pockets of strength (construction, housing-aligned services) remain evident. Moreover, some of the rebound (from the soft Q1) looks to be of the short-lived variety. The risk is that with low global oil prices and a possible El Nino event on the horizon, positive influences on primary production and mining in particular may not persist.”

“The economy is at an interesting juncture where the lagging data (i.e. GDP sub-trend) validates more monetary easing, and we expect GDP growth to end 2015 at just under 2%. Yet we suspect more timely economic indicators will show some improvement over the months ahead.”

“So while today’s data will keep speculation alive and well regarding a RBNZ OCR cut in October, we’re not in that camp.”