logo |

News

    Home   >     Industry    >     Main body

    New Zealand GDP Preview: On the brink of a technical recession, Kiwi set to fall?

    Abstract:-New Zealand's GDP set to rebound 0.5% QoQ in Q1 2021. -Supply shock is seen threatening economic recovery. -The kiwi appears vulnerable on the FOMC outcome and NZ GDP release.

      New Zealands (NZ) economy is expected to see a revival in the economic recovery or a missed technical recession in the first quarter of 2021 after witnessing a contraction in the final quarter of the last year.

      Even though the impact of the pandemic overseas continues to threaten the economic growth outlook, a closer look reveals that the surge in commodities prices, the country‘s rampant housing market and capacity constraints emerge as the factors affecting the economy’s performance.

      The South Pacific nations GDP rate is expected to rebound by 0.5% QoQ in the three months to March vs. a 1% contraction seen in the fourth quarter of 2020. On an annualized basis, the economy is seen growing by 0.9% in Q1 vs. a -0.9% recorded in the previous quarter.

    NZ economy just avoids a technical recession

      Despite New Zealands relative success in combating the coronavirus crisis, the economy is not out of the woods yet, with the recovery quite uneven and uncertain.

      Economic indicators remain upbeat, with the Reserve Bank of New Zealands (RBNZ) inflation expectation accelerating alongside the robust rise in the first quarter retail sales.

      Further, the New Zealand Institute of Economic Research (NZIER) revealed that beyond the weaker starting point for GDP growth, the near-term growth outlook has been revised up.

      Christina Leung, Principal Economist at NZIER, predicts a 1% expansion, adding that we realize that is at the higher end of the range of forecasts out there, but many of the indicators of activity in sectors such as construction, wholesale and retail trade are pretty strong for the March quarter.

      However, there are significant factors undermining the turnaround such as a slowdown in international tourism due to the closed borders, capacity constraints and supply bottlenecks.

      Biting capacity constraints (such as difficulty finding labor, global shipping delays and supply bottlenecks) have arguably become a larger constraint on activity than the demand and income shock, according to the ANZ economists.

      In light of the mixed outlook, the RBNZ has predicted a 0.6% drop in GDP for the quarter. Therefore, a downside surprise to the GDP may have little to no impact on the central banks monetary policy outlook.

    Disappointing GDP, hawkish FOMC to snap kiwis wings

      NZD/USD is bouncing off two-month lows on 0.7100 in the runup to the US Federal Reserve (Fed) showdown. The pullback can be seen as closing out of short positions ahead of the all-important FOMC monetary policy decision and the NZ Q1 GDP release, both slated for release on Wednesday.

      If the Fed turns out to be explicitly hawkish, as widely expected, it could dent the overall market sentiment while lifting the US dollar‘s demand. In such a case, the influence of the NZ GDP report on the kiwi could likely be limited, as the persisting risk trend and dollar’s moves could be the main market motors.

      Only a big beat on the NZ GDP figures could help reverse the recent downtrend in the kiwi, with a test of the powerful resistance around 0.7190 inevitable. However, or a terrible report alongside likely hawkish hints from the Fed could knock off the rates back towards 0.7100 and 0.7045 support area.

    WeChat

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    United States Dollar
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click 'Complaints 'and 'Correction' to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.