New Zealand Q2 GDP likely to rise 0.9 pct q/q, current account deficit seen at 2.8 pct: Westpac Research

New Zealand’s second-quarter gross domestic product (GDP) is expected to rise 0.9 percent q/q, a marked improvement from the subdued growth in previous quarters, according to the latest report from Westpac Research.

However, there are also some temporary negatives. Shutdowns in fuel and methanol production will subtract from growth in the June quarter, but boost in in the September quarter. But the underlying picture is of an economy that has trundled along slowly but steadily over 2018, rather than slowing further.

Indeed, the momentum is expected to pick up a little over the next year, albeit temporarily, as increased government spending kicks in. A stronger GDP result could be significant for financial markets on the day.

The other major data release next week, the balance of payments, is not usually a market mover and is even more likely to get lost in the mix this time. However, it does highlight one of the economy’s good news stories. With the terms of trade reaching an all-time high and exports of services growing strongly.

"We expect a current account deficit of 2.8 percent of GDP for the year to June. However, revisions are likely to narrow the deficit over the last few years, further highlighting how New Zealand’s international position has improved in recent times," the report added.