NZ GDP: Domestic demand is strong – HSBC

Research Analysts at HSBC explain that the New Zealand GDP was weaker than expected in Q4 2016, at 0.4% q-o-q (the market and HSBC expected 0.7%) but the year-ended growth remained above-trend at 2.7% on the production measure and 3.5% on the expenditure measure of GDP.

Key Quotes

“Exports were a drag on growth, as the dairy sector cut back production, with weather also playing a part in Q4. However, domestic demand remained strong, with construction and services the standout sectors.”

“We expect continued above trend growth over 2017, supported by rapid population growth and the investment needed to support it. We expect the RBNZ to remain on hold in 2017 and lift its cash rate in Q1 2018.”