Economists expect NZ's GDP fell 0.4 percent in the three months ended September. File photo. Photo: 123RF
- The economy likely contracted 0.4 percent in September quarter
- Activity shrank in construction, wholesale trade and manufacturing
- Energy shortage, high prices, further negative
- Q3 expected to be economy low point
The country's prolonged economic slowdown has likely continued in the third quarter, with the winter energy crunch inflicting more pain on activity.
Economists expected gross domestic product (GDP) - a broad measure of economic growth - fell 0.4 percent in the three months ended September, double the Reserve Bank forecast of a 0.2 percent fall.
The economy was forecast to be 0.4 percent lower than a year ago.
The strong growth in population over that time means the individual share of the economic pie would likely shrink further - in the second quarter it fell by 0.5 percent.
BNZ head of research Stephen Toplis expected falls in construction, wholesale trade and manufacturing.
"The latter suffering from an energy crunch in the quarter which is also expected to be reflected in a large drop in utilities valued added."
ANZ estimated the hit to electricity generation alone would have reduced quarterly growth by 0.1 percent.
The services sector - which makes up about three-quarters of the economy - would likely be flat according to BNZ, but there would be some positive news from the primary sector.
"Some growth is expected in the primary sector thanks to more milk production and a significant bounce in forestry from the previous quarter's sharp drop," Toplis said.
An area of some doubt was the revision of past data, which Stats NZ has said has lifted growth rates, although ASB senior economist Kim Mundy said they would likely be of "low relevance".
"The revisions won't change where we are in the economic cycle, which we think is around the trough. And we still expect that the output gap will remain negative, showing growing excess capacity in the economy."
Better times to come
Westpac senior economist Michael Gordon said regardless of the September quarter results, recent evidence suggested the economy was past the worst of it.
"The recent high-frequency data has been consistent with a return to modest GDP growth in the December quarter, though still not outpacing population growth yet," Gordon said.
But he said it would be some time before activity would pick up properly.
"Lower interest rates are sparking some more optimism among businesses and households, but their greatest impact on the economy tends to be felt with a one to two-year lag - so we're probably looking at the second half of next year before we see some robust growth figures," Gordon said.
A stronger economic rebound in 2025 may prompt the Reserve Bank to ease the pace of rate cuts - with Kiwibank highlighting the central bank may potentially pause cuts in May.
But Kiwibank expected the official cash rate (OCR) to be lowered to 3 percent in 2025 - and it forecast OCR cuts to result in economic growth of about 3 percent in the medium-term.
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