NZ: GDP


Wed Jun 20 17:45:00 CDT 2018

Consensus Actual Previous
Q/Q percent change 0.5% 0.5% 0.6%
Y/Y percent change 2.7% 2.7% 2.9%

Highlights
New Zealand's economy recorded slightly slower growth in the three months to March, with gross domestic product advancing 0.5 percent on the quarter, down from growth of 0.6 percent in the three months to December and in line with the the consensus forecast. GDP grew by 2.7 percent on the year in the three months to March, down from 2.9 percent in the previous quarter and also in line with the consensus forecast. Stronger growth in the manufacturing and agriculture sectors and government spending offset weaker growth in the services sector and household consumption.

The small fall in headline GDP growth in the three months to March reflects offsetting moves in the major sectors of the economy. The agriculture, forestry and fishing sector expanded by 0.8 percent on the quarter in the three months to March after contracting by 3.3 percent in the three months to December and nay 1.32 percent in the three months to September. Output in the manufacturing sector also rebounded from a previous decline, up 0.7 percent on the quarter in the three months to March after falling 0.1 percent in the three months to December. Other sectors of the economy, however, recorded weaker growth, with services sector activity up 0.6 percent on the quarter after advancing 1.1 percent previously, mainly driven by the wholesale trade and retail trade and accommodation industries. Activity in the mining, construction, and utilities sectors also slowed in the three months to March.

In expenditure terms, GDP rose 0.3 percent in the three months to March, down from 0.4 percent in the three months to December. Household consumption spending was flat on the quarter after increasing by 1.2 percent previously, while business investment growth also slowed sharply, up 0.7 percent after a previous increase of 3.9 percent. Government spending and net exports, however, both strengthened in the there months to March, the latter mainly driven by weaker growth in imports.

At the Reserve Bank of New Zealand 's most recent policy meeting in early May, officials noted that domestic growth has remained "robust", supported by solid gains in the labour force, and also expressed confidence that this growth was set to continue. The RBNZ's next policy meeting is scheduled for next week.

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.