New Zealand Treasury released July’s Monthly Economic Indicators report today. The key points are
- Mixed messages for growth as labour income continued to grow strongly but retail card spending weakened
- Risks to our growth forecasts are rising as the housing market cools, business confidence weakens, and international trade tensions rise
- Inflation remained subdued, but pressures appear to be gradually increasing
- Strong growth in the US, offset by a weaker outlook for the rest of the world
The report also noted that inflation “remained subdued” and “any monetary policy tightening remains some time away”. It pointed out market pricing “currently implies no OCR increase for at least 12 months”. And, the Treasury expected ” outlook for inflation to remain stable for the rest of the year as the drivers in either direction remain largely in balance.”
Also, it noted that “possibly the most significant risk to the world growth outlook is escalating trade protectionism”. The report said that “the direct effects of tariff measures announced by the US and China to date are expected to be minor”. However, “the Australian and New Zealand economies are likely to be significantly impacted should there be a more generalised downturn in commodity prices”.