BNZ economists say a very wide range of forecasts for the outcome of GDP figures this week likely reflects the 'noise' in the component parts

Okay, hold your ears. It's going to be a noisy one, the economists promise.

I'm talking about the release of GDP figures for the June quarter on Thursday (September 15). I've already had some words to say about this, but now as promised here's a bit of what the main bank economists have been saying. They are saying noise.

BNZ senior economist Craig Ebert says in the bank's weekly Markets Outlook publication that the "noise in the components" could help explain the "unusually wide range of market opinion", as to what Thursday’s GDP figures will deliver.

"While the market’s median expectation is for a 1.0% gain, the range traverses flat to +1.8%," he says

"Sure, a lot of the soft-end views are from overseas-domiciled analysts (who perhaps don’t have the time or inclination to go through computations and technical aspects with a fine-toothed comb). However, even amongst the local banks, we note ANZ anticipates +0.4%, Kiwibank +1.1%, ASB +1.2, and Westpac +1.6%. That constitutes an unusually big spread." 

The BNZ economists are going for 1.4% growth, while the Reserve Bank has a top-of-the-range pick of 1.8%.

"The rebound we estimate for Q2 GDP is predicated on certain service sectors, which were most suppressed by the Covid rules earlier in the year, posting significant bounce backs as local settings eased from Red to Orange, and the international border was largely opened, near the start of Q2. Think all manner of events, recreation, and transportation, starting to make up for lost time," Ebert says.

ANZ senior economist Miles Workman says leading indicators going into the Q2 GDP release have been softer than expected on balance, indicating an economy struggling to get resource to grow

"The data are still pretty noisy and will remain that way for a while. Lingering Covid disruption is meeting the ongoing 'normalisation' as services exports (international education and tourism) start to recover and domestic demand softens on the back of monetary tightening."

Kiwibank economist Mary Jo Vergara says the June quarter "report card" is likely to show an economy rebounding from the Omicron disruption, but still hamstrung by stretched capacity and labour and materials shortages.

"Despite a solid 1.1% print [the Kiwibank pick], the June quarter report will likely reveal a weaker economy than the RBNZ had forecast in August," she said.

"The RBNZ’s latest projections see a 1.8% increase in economic output. We too had initially forecast a 1.8% quarterly gain. But with the benefit of additional data, it’s clear that supply issues persist which continue to weigh on economic growth. That is, our downward revision is more reflective of supply struggles than slowing demand. A potentially weaker print, however, is unlikely to steer the RBNZ off course."

Westpac acting chief economist Michael Gordon says the reopening of the border, and the resumption of overseas tourism, is expected to provide a significant boost to areas such as travel services, accommodation, and arts and recreation.

"A result in line with our [1.6% growth] view would emphasise that the New Zealand economy remains far from recession. Indeed, the challenge is one of an economy that is running too hot," he says.

ASB economist Nathaniel Keall says while the ASB economists expect GDP lifted 1.2% in Q2, with the economy now a fraction above mid-2021 levels, "it’s a noisy quarter and our confidence in quarter-to-quarter swings is low".

He says growth is set to slow, with severe capacity constraints, painful cost pressures, higher interest rates, weaker global growth and a cooling housing market all persistent themes.

"But the economy isn’t on the brink of collapse either: we still see scope for a re-orientation in growth towards the external sector, and we expect domestic demand to prove comparatively resilient," Keall says.