Lower growth likely in GDP numbers this week

There is, though, agreement they will be far worse than last December.

The ASB thinks GDP growth for the March quarter will be a modest figure of 0.6%.

That contrasts with 3%growth in the last quarter of last year, but that was distorted by the end of the Delta lockdowns in the preceding quarter.

The ASB adds some of the 0.6% will be part of a continuing overflow from Delta, making the underlying number worse. 

It adds there are multiple headwinds such as labour shortages,  blocked supplies of raw materials and high inflation.

ASB economist Nat Keal said none of these challenges were unique to New Zealand and the economy had real strengths.

“But growth will be slower over 2022 and 2023 than it was in 2021,” he said.
Westpac economist Michel Gordon thinks even 0.6% is too optimistic.    He predicted that earlier but has revised his forecast down to around zero.

“A flat forecast does mean there’s a good chance that GDP could go backwards for the quarter,” Gordon said.

“The March quarter was a story of self imposed restrictions as the Omicron wave reached its peak.

“People stayed away from retail spaces out of caution, and the surge in infections meant that worker absenteeism proved to be a major headache for many businesses.”  

But Gordon expected growth to revive in the June quarter.

The Kiwibank economics team are more confident than either Westpac or ASB.    They are picking a rise in economic activity of 0.8% for the quarter.

They added the impact of Covid was not spread evenly, with some sectors like hospitality taking the brunt.

“But an overall 0.8% quarterly lift would be a far better outcome than initially feared,” they wrote.