ANZ tips modest growth on economy’s surprise lull
Economic growth is picking up after a lull that began late last year, ANZ believes.
The bank’s chief economist, Cameron Bagrie, forecast the pick-up would be ‘‘modest’’, however, predicting an annual GDP growth rate of 3 per cent over the next 18 months.
The economy was facing capacity constraints and other challenges that were associated with being in the late stages of the economic cycle, he said.
But there were ‘‘numerous tailwinds’’, he said. These included supportive financial conditions, good terms of trade for exports, strong migration, a lift in business investment and ‘‘modestly expansionary’’ fiscal policy.
‘‘Historically, New Zealand’s business cycle has come to an abrupt end as the combination of valuation excesses, leverage buildup, inflation, and current account profligacy result in a correction,’’ Bagrie said.
But that might not be the case this time.
‘‘While we have some excesses in the Auckland property market, and households have been leveraging again, this is being offset by LVR [loan-to-value ratio] restrictions and tighter credit conditions,’’ Bagrie said.
‘‘Inflation is low so the official cash rate will remain the same for a while yet, and the current account deficit is contained at 3 per cent of GDP.’’
Further evidence on the state of the economy will come today with the release of data on bank card spending in the June quarter. Inflation figures are due out next week.