From the New Zealand Treasury's Economic Update, issued late last week:
- Weak housing market, lower food prices and expected inflation highlights low demand
- No turning point in sight amid lower retail spending and sector-wide business activity
Treasury include a forecast for Wednesday's Reserve Bank of New Zealand meeting, with the consensus:
- Indicators continue to point to low demand heading into the second quarter affecting consumers and businesses alike.
- A convincing drop in inflation expectations, discretionary spending and normalising patterns of migration will be welcome news to the Reserve Bank but a rate cut at (this) week’s Monetary Policy Statement is unlikely.
- Furthermore, business sentiment across all sectors show no sign of a turning point in the near term painting a bleak picture at least in the domestic economy.
On China (a major NZ trading partner):
- Weaker-than-expected credit data, along with soft inflation, easing sentiment in manufacturing and services surveys and persistent housing market weakness confirm subdued domestic demand amidst weak consumer confidence.
