30 Jun 2022
ANZ Research forecasts the New Zealand economy will avoid a recession but only because of an expected strong recovery in net exports.
ANZ Research expects a contraction in the New Zealand economy over the first half of 2023. If international tourism and education don’t pick up as quickly forecast, the whole economy could easily slip into recession.
“A strong recovery in net exports will hopefully see New Zealand avoid a recession.”
The Reserve Bank of New Zealand is dealing with the low likelihood of a sharp supply-side recovery. ANZ Research has downgraded our outlook for net migration. Given we’ve also seen very strong wage growth, the task of taming inflation hasn’t got any easier.
Here’s the story we see in charts and the challenge facing regulators:
Our OCR forecast peaks at 4 per cent but 7 per cent year on year wage growth means it may need to go higher.
The output gap shows there is no capacity to meet demand without inflation lifting. That needs to change.
Net migration assumed to stay negative for longer
Residential investment and house prices
Real services exports (eg. tourism and education)
Consumer Price Inflation outlook
Miles Workman is a senior economist at ANZ New Zealand
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
30 Jun 2022
20 May 2022