\u201cThat said, it\u2019s a dated read on the state of the economy, and even more so in light of the rapidly evolving events in the Middle East.\u201d<\/p>\n
GDP was a lagging measure at the best of times, but this would be amplified this time around given the current war in the Middle East, said ASB senior economist Kim Mundy.<\/p>\n
\u201cThe economic consequences for New Zealand from the war depend on how long it lasts, but so far, the risks to economic growth are firmly skewed to the downside.\u201d<\/p>\n
Nevertheless, the fourth quarter data remained important as a signal for the current direction of travel, she said.<\/p>\n
\u201cWe expect the data to show that the economic recovery continued into the end of 2025, just with a little less vigour than in [the third quarter].<\/p>\n
On a per-capita basis, GDP looked to have expanded 0.2% quarter on quarter, the second consecutive lift.<\/p>\n
\u201cGrowth in per-capita GDP is consistent with things starting to feel a bit easier at a household [and] business level,\u201d Mundy said.<\/p>\n
\u201cBut with per-capita GDP still 3% below the peak, there\u2019s still some way to go on this road to recovery.\u201d<\/p>\n
All the bank economists\u2019 forecasts are weaker than the Reserve Bank\u2019s February pick of 0.5% growth.<\/p>\n
Kiwibank and BNZ are expecting 0.3% growth for the quarter.<\/p>\n
\u201cMost industries are set to post gains. But the standout looks likely to be sectors tied to tourism,\u201d said Kiwibank economist Sabrina Delgado.<\/p>\n
\u201cIt was another quarter of strong visitor arrivals with plenty of indicators pointing to a lift in transport, arts and rec, and retail trade and accommodation. But it\u2019s not all sunshine, with construction still dragging behind.\u201d<\/p>\n
ANZ\u2019s Matthew Galt took the gloomiest view, picking growth of 0.2% for the quarter.<\/p>\n
But a downside surprise to the RBNZ\u2019s GDP forecast of that size would only have a small impact on its thinking, he said.<\/p>\n
\u201cGDP is lagged data that is prone to revision and covers a period long before oil prices spiked,\u201d he said.<\/p>\n
\u201cAt the margin, this downside surprise would give the RBNZ a little more latitude to look through the near-term inflationary impact of the oil shock.<\/p>\n
\u201cBut the main factor for the monetary policy outlook is how the conflict in the Middle East, and the resulting impacts on medium-term inflation and growth, play out from here.\u201d<\/p>\n
Higher oil prices were not good for either inflation or activity, he said.<\/p>\n
\u201cHowever, the extent of the impact depends critically on how long the conflict and trade disruption lasts, as well as the balance of how it impacts medium-term inflation versus medium-term growth, which is all still very uncertain.\u201d<\/p>\n
In February\u2019s Monetary Policy Statement, the RBNZ estimated there was considerable spare capacity in the economy, with an output gap of -1.5% in the fourth quarter, Galt said.<\/p>\n
\u201cAt face value, a downside surprise to GDP would imply it is now wider than the RBNZ had assumed. That would help contain second-round inflation impacts,\u201d he said.<\/p>\n
\u201cHowever, we wouldn\u2019t want to overplay this given the uncertain outlook, and also recalling that annual inflation at 3.1% isn\u2019t coming from an entirely comfortable starting point.\u201d<\/p>\n
Given all that had happened in the global economy in recent weeks, it would be \u201ca pretty high bar\u201d for the fourth quarter GDP to move the dial on the Official Cash Rate call, he said.<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n