World Economic outlook - New zealand economic growth forecast 2013 : The New Zealand Treasury was slightly more downbeat on economic growth in its half-year economic and fiscal update Tuesday, lowering its growth forecasts over the next few years as the ongoing impacts of the global financial crisis and the high New Zealand dollar continue to weigh.
The latest GDP figures show the New Zealand economy growing at a tepid rate of 0.2 percent for the September quarter, and the rate for the June quarter was revised downwards from 0.6 percent to 0.3 percent.
The economy is tipped to expand 2.9% in the 12 months to March 2014 versus a prior forecast of 3.4%. Growth now averages around 2.5% over the next five years versus a prior forecast of around 3.0%,
The Treasury lowered its forecast for gross domestic product growth in the 12 months to March 31, 2013, to 2.3%, from a prior forecast of 2.6% growth contained in May's budget.
Household income growth is also forecast to slow over the year to March 2013, reflecting the lower terms of trade, and the household saving ratio remains around its current rate. From March 2013 onwards, the faster pace of GDP growth feeds through to a stronger labour market and the terms of trade improve, increasing household incomes. The household debt to income ratio has declined from its peak but remains elevated. Continued restraint in consumption spending is expected to generate higher saving and further falls in the debt-to-income ratio.
Ongoing household caution is reflected in the subdued outlook for house price inflation. The forecast for rapid growth in the supply of houses also helps to temper gains in house prices. House price growth of around 1.5% per year is forecast, less than the rate of consumer price inflation.
Private consumption growth, which has moderated since the 2008/09 recession, received a boost from the RWC. While some of the rise in consumer spending, such as that on hospitality and supermarket sales, appears to be closely linked to the RWC, spending on consumer durables, such as televisions and furniture, is indicative of a more generalised improvement in consumer sentiment.
Over the past year the labour market has strengthened, although unemployment remains elevated, household incomes have risen and consumer confidence has returned to average levels. Nonetheless, consumers continue to be cautious in their spending following an extended period when household consumption exceeded income, leading to an accumulation of debt. The excess of household consumption over income closed around the time the 2008/09 recession started and gross household income is now significantly greater than consumption.
Household consumption growth is expected to slow from 2.7% over the year ending March 2012, to 2.2% in the year ending March 2013 as the one-off impact of the RWC fades. The pace of growth rises to 2.9% in the year ending March 2014, supported by increasingly favourable economic conditions and by demand for durable goods, such as furniture and furnishings, associated with newly constructed dwellings. A gradual easing, to 2.8% and 2.6%, is forecast in the following years.
The economy is tipped to expand 2.9% in the 12 months to March 2014 versus a prior forecast of 3.4%. Growth now averages around 2.5% over the next five years versus a prior forecast of around 3.0%, the Treasury said.
The New Zealand Treasury was slightly more downbeat on economic growth in its half-year economic and fiscal update Tuesday, lowering its growth forecasts over the next few years as the ongoing impacts of the global financial crisis and the high New Zealand dollar continue to weigh.
The Treasury also forecasts net core government debt at 27.8% of GDP in the current financial year, reaching 29.5% in the year to June 2015 and the year to June 2016. In the May budget it forecast net core government debt would reach 28.6% in the year to June 2015 and 27.7% the following year.
The weaker international outlook, combined
with a stronger New Zealand dollar assumption, has also reduced
forecast real GDP growth in the years ending March 2013 and March 2014
to 2.6% and 3.4% respectively. Growth across the remaining two years of
the forecast period averages 3% per year.
GDP growth is led by investment, underpinned by the Canterbury rebuild. This is partly offset by the negative impact from the import content of investment. Consumption spending also makes a significant contribution to forecast growth as private consumption spending rises and more than offsets slower growth in public consumption. Export volume growth is expected to be subdued as farming conditions return to normal, international prices weaken and the high New Zealand dollar constrains returns, although the latter factors become more favourable towards the end of the forecast period.
The current account deficit, something Standard & Poor's ratings agency has called New Zealand's Achilles Heel, is projected to reach 6.5% in the year to March 2017, its highest point between now and 2017. The prior forecast, covering the 2012-2016 period, was for a peak of 6.7% in the year to March 2016.
IMF forecast New Zealand economy 2013
While the International Monetary Fund is warning of "sluggish and bumpy" global growth ahead, the New Zealand economy is still on track to grow over 3 per cent next year. The IMF's latest World Economic Outlook report, released this morning, slightly trimmed New Zealand's expected 2013 GDP growth to 3.1 per cent, a 0.1 percentage point dip below April forecasts.
That was against a backdrop of deteriorating global growth forecast for next year, which the IMF downgraded to 3.6 per cent from 3.9 per cent in July. The IMF said that in advanced economies, growth was now too low to make a substantial dent in unemployment.
However, it noted that activity in some regions, including New Zealand, had been boosted to some extent by recovery and reconstruction from natural disasters.
The good news was that our unemployment rate was forecast to drop back to 5.7 per cent in 2013, from an estimated 6.6 per cent this year.
New Zealand's economy is holding up better than our trans-Tasman neighbours, who had their 2013 growth prospects pared back 50 basis points to 3 per cent. But both New Zealand and Australia are forecast to develop at twice the speed of other advanced economies next year, which average just 1.5 per cent growth.
The IMF said the slowing down of economic juggernaut China, which is New Zealand's second largest trading partner, had affected activity in the Asia-Pacific region. It said near and medium-term outlooks for the region were less buoyant, with a return to double-digit growth for China unlikely in the next year.
The IMF report follows a gloomy outlook from the local NZIER quarterly survey of business opinion today. The survey results suggested annual economic growth would slow from a solid 2.6 per cent in the June quarter, towards 1.5 per cent in the second half of 2012.
The latest GDP figures show the New Zealand economy growing at a tepid rate of 0.2 percent for the September quarter, and the rate for the June quarter was revised downwards from 0.6 percent to 0.3 percent.
The economy is tipped to expand 2.9% in the 12 months to March 2014 versus a prior forecast of 3.4%. Growth now averages around 2.5% over the next five years versus a prior forecast of around 3.0%,
The Treasury lowered its forecast for gross domestic product growth in the 12 months to March 31, 2013, to 2.3%, from a prior forecast of 2.6% growth contained in May's budget.
Figure Household saving and leverage
Ongoing household caution is reflected in the subdued outlook for house price inflation. The forecast for rapid growth in the supply of houses also helps to temper gains in house prices. House price growth of around 1.5% per year is forecast, less than the rate of consumer price inflation.
Real private consumption growth
 |
| Sources: Statistics New Zealand, the Treasury |
Over the past year the labour market has strengthened, although unemployment remains elevated, household incomes have risen and consumer confidence has returned to average levels. Nonetheless, consumers continue to be cautious in their spending following an extended period when household consumption exceeded income, leading to an accumulation of debt. The excess of household consumption over income closed around the time the 2008/09 recession started and gross household income is now significantly greater than consumption.
Household consumption growth is expected to slow from 2.7% over the year ending March 2012, to 2.2% in the year ending March 2013 as the one-off impact of the RWC fades. The pace of growth rises to 2.9% in the year ending March 2014, supported by increasingly favourable economic conditions and by demand for durable goods, such as furniture and furnishings, associated with newly constructed dwellings. A gradual easing, to 2.8% and 2.6%, is forecast in the following years.
The economy is tipped to expand 2.9% in the 12 months to March 2014 versus a prior forecast of 3.4%. Growth now averages around 2.5% over the next five years versus a prior forecast of around 3.0%, the Treasury said.
The New Zealand Treasury was slightly more downbeat on economic growth in its half-year economic and fiscal update Tuesday, lowering its growth forecasts over the next few years as the ongoing impacts of the global financial crisis and the high New Zealand dollar continue to weigh.
The Treasury also forecasts net core government debt at 27.8% of GDP in the current financial year, reaching 29.5% in the year to June 2015 and the year to June 2016. In the May budget it forecast net core government debt would reach 28.6% in the year to June 2015 and 27.7% the following year.
Figure - Composition of GDP growth
 |
| Sources: Statistics New Zealand, the Treasury |
GDP growth is led by investment, underpinned by the Canterbury rebuild. This is partly offset by the negative impact from the import content of investment. Consumption spending also makes a significant contribution to forecast growth as private consumption spending rises and more than offsets slower growth in public consumption. Export volume growth is expected to be subdued as farming conditions return to normal, international prices weaken and the high New Zealand dollar constrains returns, although the latter factors become more favourable towards the end of the forecast period.
The current account deficit, something Standard & Poor's ratings agency has called New Zealand's Achilles Heel, is projected to reach 6.5% in the year to March 2017, its highest point between now and 2017. The prior forecast, covering the 2012-2016 period, was for a peak of 6.7% in the year to March 2016.
IMF forecast New Zealand economy 2013
While the International Monetary Fund is warning of "sluggish and bumpy" global growth ahead, the New Zealand economy is still on track to grow over 3 per cent next year. The IMF's latest World Economic Outlook report, released this morning, slightly trimmed New Zealand's expected 2013 GDP growth to 3.1 per cent, a 0.1 percentage point dip below April forecasts.
That was against a backdrop of deteriorating global growth forecast for next year, which the IMF downgraded to 3.6 per cent from 3.9 per cent in July. The IMF said that in advanced economies, growth was now too low to make a substantial dent in unemployment.
However, it noted that activity in some regions, including New Zealand, had been boosted to some extent by recovery and reconstruction from natural disasters.
The good news was that our unemployment rate was forecast to drop back to 5.7 per cent in 2013, from an estimated 6.6 per cent this year.
New Zealand's economy is holding up better than our trans-Tasman neighbours, who had their 2013 growth prospects pared back 50 basis points to 3 per cent. But both New Zealand and Australia are forecast to develop at twice the speed of other advanced economies next year, which average just 1.5 per cent growth.
The IMF said the slowing down of economic juggernaut China, which is New Zealand's second largest trading partner, had affected activity in the Asia-Pacific region. It said near and medium-term outlooks for the region were less buoyant, with a return to double-digit growth for China unlikely in the next year.
The IMF report follows a gloomy outlook from the local NZIER quarterly survey of business opinion today. The survey results suggested annual economic growth would slow from a solid 2.6 per cent in the June quarter, towards 1.5 per cent in the second half of 2012.
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