Westpac on the New Zealand economy, they say 'the tide has turned':

  • We have experienced a ferocious unexpected decline in global dairy prices
  • It is also now apparent that the Canterbury rebuild has levelled off nine months earlier than anticipated and is no longer boosting economic growth
  • Business and consumer confidence have already plunged

Such a significant change in backdrop requires a significant change in our forecasts:

  • Now expect GDP growth to drop from 3.3% to below 2% in short order
  • Unemployment to rise to around 6.5%
  • Housing market to slow
  • Expect the OCR to fall to 2.0%
  • Exchange rate to remain under downward pressure
  • We have been able to forecast a modest recovery in GDP growth from mid-2016 onwards

more to come