The latest NZIER Consensus Forecasts (CF) show a downward revision to growth forecasts later this year the report shows.
However, it states that ”this partly reflects a higher starting point, as the recovery in demand after lockdown restrictions were relaxed turned out to be stronger than expected.”
Key notes
”The downward revision to the medium-term growth outlook largely reflects expectations that the rebound in household spending will not be as sharp as initially expected. There has also been a downward revision to the longer-term outlook for residential investment, but this follows expectations of strong growth over the coming year.”
”Dwelling consent issuance and the NZIER Quarterly Survey of Business Opinion’s architects’ measure of activity in their own office indicates a robust pipeline of residential construction over the coming year.”
”Low interest rates have contributed to the increase in housing demand, with the surge in house prices encouraging new housing supply to come on board.”
”Expectations for other investment over the coming years remain robust. Business confidence is recovering, with businesses feeling more positive about hiring and investment. Employment demand is picking up and with signs of a re-emergence in labour shortages the unemployment rate has been revised lower.”
”This is expected to flow through to stronger wage growth over the coming years. The increase in inflation pressures is underpinning higher interest rate expectations, with Consensus Forecasts now suggesting expectations of an increase in the OCR from 2022.”