NZIER lowered near-term economic outlook of New Zealand, reflecting the impact of pandemic restrictions, “which turned out to persist for longer than initially expected”. For the year to March 2022, GDP growth was revised down from 4.5% to 4.3%. But growth for 2023 was revised up from 4.5% to 4.6%.
Growing capacity pressures are contributing to a sharp rise in inflation. CPI is expected to 5.1% in 2022 (up from prior estimate of 3.0%), and remain elevated above RBNZ’s inflation target mid-point of 2% “through to 2025”.
NZD trade-weighted index forecast was revised lower “partly reflecting market disappointment at smaller than expected interest rate increased from the Reserve Bank in its November meeting.” NZD TWI is expected to peak at 74.5 for the year to March 2023 (revised down from 74.8), then ease to 72.7 in 2025.
