NZ: Economy is undergoing a transition - ANZ

In view of analysts at ANZ, the NZ economy is undergoing a transition and the previous engines of growth are not revving as they once were and the economy is facing headwinds.

Key Quotes

“In our view, the economy will struggle to grow above trend and acceleration in GDP growth from here seems unlikely. Based on our expectation that GDP will grow 2½-3% y/y, we expect it will be difficult to sustain inflation near 2% y/y over the medium term.”

“Headline inflation looks set to rise, but much of this will be transitory and the RBNZ will look through it. We currently see the OCR on hold for the foreseeable future; the RBNZ has time to see how conditions evolve. But given the risks of an eventual growth sputter, we see it as more likely that the next move is a cut than a hike.”