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The NZ economy expanded by 0.5% q/q in Q1, in line with consensus expectations and is a more modest pace of growth than the 0.6% pace recorded in Q4 and the strong rates of growth seen since 2014 (0.9% q/q on average), according to Liz Kendall, Senior Economist at ANZ.

Key Quotes

“Annual growth moderated from 2.9% y/y to 2.7% y/y.”

“Economic momentum continues to slow gradually, consistent with recent lacklustre data flow.  The underlying picture is weaker than the headline suggests.  In per capita terms, GDP has stalled, at 0.0% q/q (0.6% y/y).”

On the production side, 13 of the 16 industries recorded stronger levels of activity.”

Expenditure GDP rose a more modest 0.3% q/q.”

Consumption was flat in the quarter (3.8% y/y), despite strong population growth.”

Gross fixed capital investment increased 0.7% q/q (3.9% y/y).”

“Nominal GDP fell 0.4% q/q, but is running at 6.0% annually. Real gross national disposable income rose 0.1% q/q (3.4% y/y) pace.”

We don’t think the cycle is out in the cold just yet.  The economy is in the midst of headwinds, but it is also flexible and resilient.”

“It is fair to say that downside risks to the outlook have increased a little of late. And with the economy expected to grow around trend, this is of particular relevance for the RBNZ.”