NZ GDP and Current Account Q4 2014 preview

Thr GDP for the December quarter was expected to have an 0.7% increase, with the risks more to the downside.
 
The expected slowdown in the pace of GDP growth compared to September is not as substantial as it might seem, as there were some elements of the previous quarter that looked overdone or were unlikely to be repeated.
 
The annual current account deficit is expected to widen from 2.6% to 3.2% of GDP, driven entirely by a deterioration in the goods trade balance. 

That widening has as much to do with what's dropping out of the annual balance as with what's going in: in the December 2013 quarter, a steep rise in dairy export prices led to a record trade surplus.

Westpac notes as follows on Wednesday:

• We expect GDP growth to have slowed, though only to around trend, in the December quarter. The current account deficit is set to widen as the full force of last year's drop in dairy export prices is felt.
  
  
• We estimate that GDP rose by 0.7% in the December quarter, led by continued strength in consumer spending.
  
  
• The current account deficit is expected to widen to 3.2% of GDP as the impact of last year's fall in dairy export prices flows through.
  
  
• A quarter of around-trend GDP growth, and a restatement of last year's dairy price decline, would not change the RBNZ's assessment of inflation pressures.