NZ HYEFU Preview: Sticking to the script – ANZ

Analysts at ANZ expect the vibe of next week’s Half-Year Economic and Fiscal Update (HYEFU) and Budget Policy Statement (BPS) of New Zealand economy to be broadly unchanged from May’s Budget Update and Fiscal Strategy Report.

Key Quotes

“An increased emphasis on well-being is likely to feature, but this is more of a lens through which to assess the Government’s priorities than something that will impact the aggregate numbers.”

“Overall, the stronger starting point for the Government’s books provides a little wiggle room on the spending side, but we expect this to be relatively modest given the Government will be sticking to its five Budget Responsibility Rules.”

“We think the Treasury’s economic forecasts will remain relatively upbeat. On the one hand, its assessment of near-term economic momentum is likely to be a little more optimistic than our own, reflecting the solid starting point for GDP (up 1.0% q/q in Q2) and the strong labour market (Q3 unemployment rate of 3.9%). However, we would be surprised if the recent softening in export prices, moderating global growth (and outlook downgrade), cooling housing market, and shrinking impetus to growth from easing net migration inflows don’t trim the peak off its previous (optimistic) growth outlook.”