Gross Domestic Product in the June quarter rose 1.0%, exposing the ANZ Bank’s Business Outlook confidence survey as little more than a National Party and big business propaganda tool.
At an annualised growth rate of 4.0%, the economy has been expanding well beyond what the Reserve Bank believes is sustainable without creating excessive inflation and may have to be hosed down by an interest hike.
The RBNZ, which had forecast only a 0.5% rise in GDP in the quarter, estimates the sustainable annual growth rate is only around 3.0%.
Analysis by independent researchers at the Parliamentary Library shows the ANZ Business Outlook has the poorest correlation between what is forecast and reality of major forecasting tools.
Both Treasury’s and RBNZ’s forecasts have been far more accurate as has the Outlook’s survey of businesses’ own prospects.
Throughout the years of the Clark Labour government ANZ’s Outlook survey remained gloomy despite the economy growing at an average 3% during those nine years.
Westpac Bank economists said today’s data showed encouraging signs in the economy.
“Not only was the overall result stronger than expected, the details were more encouraging for the economy’s growth prospects going forward,” Westpac economists said in a note.
Growth was shared widely across the whole economy.
Ironically, ANZ’s senior economist Liz Kendall admitted the economy is “in an okay space”.
Net exports, which ANZ had forecast would be negative in the quarter, instead made a solid positive contribution.
The only negative contributor was — surprise, surprise — business investment – no doubt the result of the funk that business leaders have talked themselves in the wake of the surprise election result that tossed the National Party out of government.
Westpac economists said the result was significant for the Reserve Bank’s official cash rate decision next Thursday. Any thought the economy needs more stimulus via a further cut from the already low Official Cash Rate level of 1.75% can be cast into the same garbage bin as the Outlook survey.
Capital Economics said the Reserve Bank can assume consumer and business gloom is overdone and that growth would “reaccelerate” next year.
Though Westpac’s Consumer Confidence Survey shows consumer confidence at six-year lows, optimists still outweigh pessimists. Its chief economist Dominick Stevens says consumers may be simply reacting to the highly publicised negativity of the business community.
A recent IPSOS survey showed New Zealanders are feeling more positive about the Labour-NZ First coalition government than they were about the previous one.
Recipients thought that the current Labour-led government was doing a much better job than National was in July 2017. Labour scored a mean score of 5.4 out of a maximum possible score of 10, and National scored 4.9.
(Simon Louisson has reported for The Wall Street Journal, AP Dow Jones Newswires, New Zealand Press Association and Reuters and has worked as a political and media adviser to the Green Party.)