JC Rothchild General - NZ Economic Recovery Stronger Than Expected

Better than expected Q1 growth could prompt RBNZ to hike interest rates sooner, say economists at JC Rothchild General.

Tokyo, Japan, June 22, 2021 --(PR.com)-- New Zealand’s economy expanded more quickly than anticipated, avoiding a double dip recession in the first quarter of this year as it surged its way out of the slowdown brought about by the global health crisis.

After contracting by 1 percent in the final quarter of 2020, data recently released by Statistics New Zealand revealed that the country’s GDP expanded by 1.6 percent in the first quarter. This was a much higher rate of growth than the 0.4 percent economists at JC Rothchild General had anticipated.

Economists at JC Rothchild General believe the stronger than expected growth was likely driven by a robust rebound in construction activity and solid domestic spending. New Zealand’s property market is currently experiencing a boom and the government has implemented generous fiscal stimulus. This has helped the country cope with the closure of its borders to foreign visitors.

“Activity in the construction sector and strong household spending were sufficient to offset the losses seen due to the absence of international tourism,” said Mr. Akifumi Endo, Chief Finance Officer at JC Rothchild General.

Since the beginning of the global pandemic, New Zealand has been ahead of its peers in its management and containment of the virus. Its success in containing its coronavirus numbers enabled the economy to stage a V-shape recovery.

While this is good news for the economy, economists at JC Rothchild General say the recent surprise growth could prompt the central bank to tighten monetary policy sooner than expected. A stronger than expected economy and subsequent higher inflation could see the Reserve Bank of New Zealand hiking interest rates as early as May next year.
JC Rothchild General
Yuma Takagi
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