New Zealand Country Risk Report Q4 2015 - New Market Report

From: Fast Market Research, Inc.
Published: Mon Sep 28 2015

The New Zealand economy is experiencing a gradual deleveraging cycle, which will weigh on real GDP growth over the coming years. While declining oil prices will provide some support to corporate profit margins and economic activity, these positives will likely be offset by the joint deterioration in the dairy and construction sectors, which remain the two key pillars of the economy.

While we believe that the New Zealand government's target for a fiscal surplus in Fiscal Year 2014/15 will not be achieved, the fiscal accounts remain in better health compared with most developed market economies. We expect the country's fiscal accounts to flip to a surplus of 0.1% of GDP in FY2015/16 (July-June) from a deficit that is equivalent to 0.2% of GDP in FY2014/15. This will be supported by continued spending restraint, which should keep government spending relative to GDP stable even as the welfare burden grows.

Following cuts of 25 basis points (bps) each at its June and July monetary policy meetings, we are forecasting the Reserve Bank of New Zealand (RBNZ) to cut its official cash rate (OCR) by 25 basis points (bps) to 2.75% by the end of 2015 as a result of a weakening economy. With inflation remaining below its medium-term target of 2.0%, the central bank will also be pressured to ease interest rates in an attempt to spur inflation.

Full Report Details at

Despite the gradual improvement since 2008, New Zealand's external accounts remain the economy's weak link and a persistent current account deficit poses risks of large-scale capital outflow. In order to correct these imbalances, we will need to see domestic savings rise sharply, while investment growth cools, which will undermine economic growth to some extent.

We expect the New Zealand dollar to fall against the US dollar over the medium term, and head towards the long-term support of approximately USD0.600/NZD as a result of declining real interest rates and a deterioration in the terms of trade picture.

The New Zealand Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in New Zealand. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of New Zealand's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

* Forecast the pace and stability of New Zealand's economic and industry growth through end-2019.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
* Contextualise

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Company: Fast Market Research, Inc.
Contact Name: Bill Thompson
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Contact Phone: 1-413-485-7001

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