Investor Presentaiton
Solid growth outlook, low interest rates a key
support
While inflation has picked up, imported inflation remains low. To ensure
overall inflation returns to the 2% target mid-point, the RBNZ needs the
domestic economy to continue growing at solid pace. Consequently, we
expect the RBNZ to hold the OCR at its current low level for an
extended period.
Annual net immigration rose to a record level of 70,000 over the past
year, boosting annual population growth to over 2%. Combined with low
interest rates, this is providing a strong boost to spending.
There is a very strong outlook for residential construction centred on
Auckland, and a large pipeline of non-residential construction work,
including infrastructure spending.
Spending on the Canterbury rebuild (equal to around 15% of annual
GDP) is around 60% complete and has started to gradually wind down.
Reconstruction following recent earthquakes near Kaikoura will add to
construction activity, but has not materially changed the outlook.
Inflation
%
6
5
сл
4
3
2
1
0
2007
2009
2011
%
CO
6
CPI inflation
Forecast
5
сл
CPI excluding
petrol
4
3
2
1
0
2013
2015
2017
Construction spending (annual)
$bn
40
33225050
15
10
■Kaikoura earthquake costs
■Canterbury rebuild
■Construction (excl. quake costs)
Source: Statistics NZ, Westpac economics
Net migration (annual)
$bn
000s
40
Forecast
OGGNN GE
75
35
30
- 25
25
25
20
0
15
50
50
10
-25
000s
Total
75
55
New Zealanders
50
Other
50
25
0
-25
Forecast
-50
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: Statistics NZ, Westpac economics
-50
2005
2008
2011
2014
2017
2020
2023
Source: Statistics NZ, Westpac economics
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