Economists are picking a strong economic finish for 2013,
with gross domestic product (GDP) for the quarter to December
expected at 0.9%, when Statistics New Zealand data is released
While the effects of the 2013 drought are expected to be gone
from the last quarter data and the dairy rebound and
Canterbury construction are in the driving seats, economic
reaction to the Reserve Bank's rising official cash rate will
be the focus for many.
Reflecting the strong GDP data expected in the Westpac
McDermott Miller consumer confidence index released
yesterday, it rose to 121.7 in March, up slightly from 120.1
from the December survey, and was the highest reading since
March 2005, when it was 126.7.
Westpac chief economist Dominick Stephens said economic
optimism among New Zealand consumers had risen to levels last
seen at brief points during the mid-1990s and mid-2000s.
''Clearly, there is now a consensus out there that the
combination of a construction boom and export prices at
multidecade highs is a sweet spot for the New Zealand
economy,'' he said in a statement.
ASB chief economist Nick Tuffley said that unlike the
previous quarter, he expected growth during the fourth
quarter would be broadly based across the sectors, with
construction, stronger household spending and a recovery in
business investment to probably all be underpinning the New
Zealand economy during the next two years.
He expected the December quarter to show ''continued robust
growth'' of 0.9% in the economy, following the 1.4% rebound
in the previous quarter. However, unlike the previous quarter
when growth was concentrated in the agriculture and primary
manufacturing sectors, and reflected recovery from the
previous summer's drought, Mr Tuffley expected growth would
be ''fairly spread'' across most economic sectors. Stronger
construction activity from the Canterbury rebuild and
house-building demand in Auckland was flowing through to
stronger demand in other sectors.
''In particular, manufacturing activity has benefited from
the lift in construction. Higher construction activity has
also seen stronger demand for professional services such as
engineering consulting,'' he said.
Mr Tuffley noted retail sales had continued to improve in the
final quarter of 2013 as the recovering labour market and
higher house prices supported stronger consumer confidence.
Westpac economist Michael Gordon estimated the country's
current account deficit would have narrowed to 3.3% of gross
domestic product during the year to December, from 4.1% in
the year to September.
''If so, this would be the biggest one-quarter improvement in
the deficit on record outside of a recession,'' Mr Gordon
The main factor behind this was an ''almost unprecedented
jump in export volumes'', or about 10% in seasonally adjusted
''Although milk production had returned to its pre-drought
trend by the September quarter, shipments of dairy exports
didn't follow suit until the December quarter.
''In addition, there was a strong lift in exports of meat and
manufactured goods, both of which had softened over the
previous two quarters,'' Mr Gordon said.
BNZ chief economist Craig Ebert said unless the data provided
an unexpected and ''monumental clanger'', the markets would
take little notice, ''instead remaining intently focused on
how the economy is going to react to the process of OCR
normalisation now under way''.
The gross domestic product data premium would be in the
upcoming business and sentiment surveys, and anything else
which might seem exposed to rising interest rates, which
included house prices, Mr Ebert said.