S&P Global Ratings expects New Zealand’s economic activity to pick up over the next two years but says the short-term environment will be tough, particularly as the global economy slows.
“We forecast growth of 0.2% for 2023, followed by 1.7% and 2.5% in 2024 and 2025, respectively,” S&P Global Ratings economist Vishrut Rana said.
It had previously expected 0.8% growth for 2023, according to the latest Economic Outlook Asia-Pacific Q3 2023: Domestic Demand, Inflation Relief Support Asia’s Outlook.
Higher interest rates are slowing NZ economic activity while still-elevated inflation weighs on consumer confidence, Rana said.
Residential prices are declining, which is contributing to subdued activity and confidence in real estate markets, he said.
“There is likely to be receding support from external demand this year as the global economy slows. New Zealand’s real exports are now slowing following strong growth in 2022”.
Regarding China – NZ’s main trading partner – S&P Global nudged down its growth forecast for China from 5.5% to 5.2%.
It is expecting China’s economy to grow by 4.7% in 2024 versus a prior view of 5.0%.
“China’s recovery should continue but at an uneven pace, with investment and industry lagging,” it said.
“Overall, we maintain our outlook for a slowdown in Asia-Pacific excluding China to a still meaningful 3.8% from 4.7% in 2022, with a more pronounced deceleration in economies heavily exposed to slowing global trade and interest rate increases.”
Those economies include NZ.
According to Rana, however, things will start looking up quite quickly.
He expects NZ growth to “resume in 2024 as inflation returns to moderate levels, which will aid consumer confidence”.
He also noted the strong labour market will play a supportive role and said recovering global growth should provide support to external demand over 2024 and 2025.
On the inflation front, Rana said it has started moderating in sequential terms, and inflation rates should ease further through the rest of the year. This should help contain inflation expectations.
S&P Global Ratings expects the Reserve Bank of NZ (RBNZ) will pause interest rate hiking and look to keep rates on hold while it assesses the impact on inflation and the economy.
“We expect the RBNZ to begin gradual monetary policy easing in 2024,” he said.
S&P expects the official cash rate to be at 5.0% by the end of 2024, down from 5.5% currently. It then sees it easing to 4.0% by the end of 2025 and 3.50% by the end of 2026.
S&P GLOBAL Ratings expects New Zealand’s economic activity to pick up over the next two years but says the short-term environment will be tough, particularly as the global economy slows.
“We forecast growth of 0.2% for 2023, followed by 1.7% and 2.5% in 2024 and 2025, respectively,” S&P Global Ratings economist Vishrut Rana said.
It had previously expected 0.8% growth for 2023, according to the latest Economic Outlook Asia-Pacific Q3 2023: Domestic Demand, Inflation Relief Support Asia’s Outlook.
Higher interest rates are slowing NZ economic activity while still-elevated inflation weighs on consumer confidence, Rana said.
Residential prices are declining, which is contributing to subdued activity and confidence in real estate markets, he said.
“There is likely to be receding support from external demand this year as the global economy slows. New Zealand’s real exports are now slowing following strong growth in 2022”.
Regarding China – NZ’s main trading partner – S&P Global nudged down its growth forecast for China from 5.5% to 5.2%.
It is expecting China’s economy to grow by 4.7% in 2024 versus a prior view of 5.0%.
“China’s recovery should continue but at an uneven pace, with investment and industry lagging,” it said.
“Overall, we maintain our outlook for a slowdown in Asia-Pacific excluding China to a still meaningful 3.8% from 4.7% in 2022, with a more pronounced deceleration in economies heavily exposed to slowing global trade and interest rate increases.”
Those economies include NZ.
According to Rana, however, things will start looking up quite quickly.
He expects NZ growth to “resume in 2024 as inflation returns to moderate levels, which will aid consumer confidence”.
He also noted the strong labour market will play a supportive role and said recovering global growth should provide support to external demand over 2024 and 2025.
On the inflation front, Rana said it has started moderating in sequential terms, and inflation rates should ease further through the rest of the year. This should help contain inflation expectations.
S&P Global Ratings expects the Reserve Bank of NZ (RBNZ) will pause interest rate hiking and look to keep rates on hold while it assesses the impact on inflation and the economy.
“We expect the RBNZ to begin gradual monetary policy easing in 2024,” he said.
S&P expects the official cash rate to be at 5.0% by the end of 2024, down from 5.5% currently. It then sees it easing to 4.0% by the end of 2025 and 3.50% by the end of 2026.
d’s economic activity to pick up over the next two years but says the short-term environment will be tough, particularly as the global economy slows.
“We forecast growth of 0.2% for 2023, followed by 1.7% and 2.5% in 2024 and 2025, respectively,” S&P Global Ratings economist Vishrut Rana said.
It had previously expected 0.8% growth for 2023, according to the latest Economic Outlook Asia-Pacific Q3 2023: Domestic Demand, Inflation Relief Support Asia’s Outlook.
Higher interest rates are slowing NZ economic activity while still-elevated inflation weighs on consumer confidence, Rana said.
Residential prices are declining, which is contributing to subdued activity and confidence in real estate markets, he said.
“There is likely to be receding support from external demand this year as the global economy slows. New Zealand’s real exports are now slowing following strong growth in 2022”.
Regarding China – NZ’s main trading partner – S&P Global nudged down its growth forecast for China from 5.5% to 5.2%.
It is expecting China’s economy to grow by 4.7% in 2024 versus a prior view of 5.0%.
“China’s recovery should continue but at an uneven pace, with investment and industry lagging,” it said.
“Overall, we maintain our outlook for a slowdown in Asia-Pacific excluding China to a still meaningful 3.8% from 4.7% in 2022, with a more pronounced deceleration in economies heavily exposed to slowing global trade and interest rate increases.”
Those economies include NZ.
According to Rana, however, things will start looking up quite quickly.
He expects NZ growth to “resume in 2024 as inflation returns to moderate levels, which will aid consumer confidence”.
He also noted the strong labour market will play a supportive role and said recovering global growth should provide support to external demand over 2024 and 2025.
On the inflation front, Rana said it has started moderating in sequential terms, and inflation rates should ease further through the rest of the year. This should help contain inflation expectations.
S&P Global Ratings expects the Reserve Bank of NZ (RBNZ) will pause interest rate hiking and look to keep rates on hold while it assesses the impact on inflation and the economy.
“We expect the RBNZ to begin gradual monetary policy easing in 2024,” he said.
S&P expects the official cash rate to be at 5.0% by the end of 2024, down from 5.5% currently. It then sees it easing to 4.0% by the end of 2025 and 3.50% by the end of 2026.
