Limited financial data out this week is likely to bring more bad news, particularly about terms of trade and unhelpful pressure on New Zealand's current account deficit.
BNZ head of research Stephen Toplis said yesterday tomorrow's merchandise trade figures were likely to disappoint.
"The preface to this is that exports were far stronger than expected over June and July, reflecting a big flush of dairy and meat volumes which cannot last. We're bracing ourselves for some fading in August's export figures."
Formally, the BNZ was picking a 6% fall in year-on-year export figures for August.
Merchandise imports were forecast to have maintained some nominal annual growth, albeit it just 3%. That added up to a monthly trade deficit of $731 million, negative enough to keep the annual trade deficit expanding, he said.
That would maintain unhelpful pressure on New Zealand's current account deficit - the difference from what New Zealand earns in exports and spends on imports.
"Of course, these accounts gave a sense of reprieve in their update of last week. The year-to-June deficit was 'only' 4.9% of GDP, compared to market expectations of 5.2% and ours of 5.4%.
"However, make no mistake, the trends are still poor. We believe the current account deficit will be pushing 6% of GDP by year's end and closer to 7% next year. It will get on the radar of foreign traders at some point."
Friday's building consents data would be studied to affirm the view that the rebound trend was still under way, Mr Toplis said. He was increasingly confident that construction activity was increasing in Canterbury but more in infrastructure than commercial and residential work.
Friday's credit aggregates were likely to show a continued pick-up but in an unspectacular way. The strongest annual growth had happened in the agriculture sector with 5% growth in July.
The remainder of the business sector was running at 3.7%, housing credit at 1.9% and consumer credit at 1.2%.
Overall, resident private sector credit established a 3.5% pace in July.
"While this is not what you'd call strong growth, it is building on already high debt levels and so would hardly seem justification for running unusually low interest rates forever and a day."
