NZ: GDP


Wed Dec 20 15:45:00 CST 2017

Consensus Actual Previous Revised
Q/Q percent change 0.6% 0.6% 0.8% 1.0%
Y/Y percent change 2.4% 2.7% 2.5% 2.8%

Highlights
New Zealand's economy posted slower growth in the three months to September, with gross domestic product advancing by 0.6 percent on the quarter, down from revised growth of 1.0 percent in the three months to June but matching the consensus forecast. GDP grew by 2.7 percent year-on-year in the three months to September, also down from a revised 2.8 percent in the previous quarter but above the consensus forecast of 2.4 percent. This decline in headline growth largely reflects a reversal of the boost to New Zealand's economy that was provided by a significant increase in foreign visitors for major international sporting events in the three months to June.

Weaker headline GDP growth in the three months to September was broad-based across several major sectors of the economy. The service sector expanded by 0.6 percent on the quarter, weakening from strong growth of 1.0 percent in the three months to June that had been largely driven by the surge in foreign visitors. The agriculture, forestry and fishing sector contracted by 1.0 percent in the three months to September after growth of 2.4 percent previously while utilities output also contracted, down 1.6 percent on the quarter after fall growth in the three months to June. Growth in the manufacturing sector was steady at 0.7 percent on the quarter, while output in the mining and construction sectors both rebounded from declines in the three months to June.

In expenditure terms, GDP rose 0.9 percent in the three months to September, down from a revised 1.4 percent in the three months to June. This decline again largely reflected the impact of large visitor numbers in the three months to June, with exports of services (such as accommodation and other tourist-related amenities) falling by 1.2 percent on the quarter in the three months to September after increasing by 4.9 percent in the previous quarter. Household consumption spending also posted slightly weaker growth, up 0.9 percent on the quarter compared with 1.1 percent previously. Investment spending, however, strengthened in the three months to September, up 1.6 percent on the quarter compared with 0.4 percent previously, while quarterly growth in government spending picked up from 1.3 percent to 2.5 percent.

Definition
GDP data are a comprehensive measure of a New Zealand's overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. GDP calculates the total market value of goods and services produced in New Zealand within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only. The New Zealand System of National Accounts (NZSNA) is a comprehensive accounting framework based on an international standard (System of National Accounts, 1993).

Gross domestic product (GDP) can be measured using three approaches, namely the production, income and expenditure approaches. The production measure of GDP is derived from firm level data and estimates the value added by all producing industries in the New Zealand economy. The income measure of GDP is derived from earnings data and estimates how the income earned from these producing industries is then distributed throughout the economy as returns to labor, capital and government. The expenditure measure of GDP is derived from data estimating spending on goods and services by final end users and includes consumption, investment and exports minus the value of imports.



Description
GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.