How are 5 NZ banks faring amid GDP drop in September quarter?

Highlights

• NZ’s GDP contracted 3.7% in the September quarter, as per the latest figures released by Stats NZ on Thursday.
• Economists and banks, including the RBNZ, had predicted NZ’s GDP to drop by a higher percentage.
• A lower-than-anticipated drop in GDP due to a stronger NZ economy before the delta variant struck.

Grant Robertson stated that NZ’s GDP data shows that the economy broadly stayed resilient due to the strength that had built up before the outbreak cushioned the impact of the new Delta variant. He added that this underlines that the Government’s measures to help businesses and protect livelihoods are working.

NZ’s economic output contracted 3.7% in the September quarter, lesser than forecasts by Treasury and analysts.

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On the back of this, let’s see how these 5 banks are performing.

Westpac Banking Corporation

Westpac’s latest Regional Round-up report stated that as NZ had shifted to a new traffic light system, the economic activity might bounce back in lockdown areas of NZ.

DO READ: Why did NZ’s GDP decline in September quarter?

The bank’s economists stated that the new COVID-19 strain, Omicron, and a weak housing market can cause problems for the NZ economy in 2022 even though the overall outlook stayed positive.

Bank of New Zealand

BNZ’s head of research, Stephen Toplis, stated that a drop of 3.7% in the NZ GDP is nowhere near as anticipated. He had forecast a drop of 7% in NZ’s economic output.

He asserted that that did not show the NZ economy was not hit by recent restrictions but rather revealed that the economy had suffered in ways that were not seized by crude activity measures.

ASB Bank

ASB Chief Economist Jane Turner had forecasted a drop of 3.3% in NZ’s GDP for the third quarter.

ALSO READ: How are 4 NZX financial stocks faring on solid labour market?

She stated that the NZ economy stayed resilient as GDP growth in the first half of the quarter was strong on the back of robust Q2. Moreover, regions outside Auckland may have seen a stronger recovery than expected. She expects the economic activity to return to pre-pandemic levels sometimes near H1 of 2022.

Kiwibank

Kiwibank economist Jarod Kerr expects NZ’s economic output to bounce back strongly next year amid solid demand. However, inflation is expected to increase further due to serious cost pressures and the labour market to stay tight.

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The bank expects interest rates to rise further in coming months due to a smaller-than-expected drop in GDP in the September quarter.

Australia and New Zealand Banking Group Limited

ANZ had forecasted a drop of 4.5% in NZ’s GDP.

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ANZ NZ Chief Economist Sharon Zollner stated that a comparatively smaller drop in GDP in the September quarter revealed that many businesses had learnt to function in a better way through lockdowns compared to 2020. However, economic pain for some firms still remains quite high.

Bottom Line

Lockdown and ongoing effects are likely to be felt in 2022 as businesses recover. Inflation, supply chain concerns remain, which may restrict the economy from registering strong growth.