The latest NZIER Consensus Forecasts shows a slightly lower growth outlook, relative to the previous quarter.
Although near-term expectations for household spending growth have been revised up, this is offset by downward revisions to investment and export forecasts. Population growth is slowing, but the surge in population in recent years is continuing to support demand for residential investment. However, capacity constraints in the construction sector means the construction cycle is likely to be more protracted.
Despite the downward revisions, the investment outlook remains reasonably robust. Although there is some caution about investment amongst firms in the face of continued weak
profitability, as wage growth picks up this should incentivise firms to invest in labour-saving technology over the coming years.
Employment growth forecasts have been revised lower, but the labour market is expected to remain very tight. Nonetheless, wage growth and inflation is expected to remain contained over the next few years.
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