PowerPoint Tempate - Business Rural · AKL CHCH WGTN Other Nationwide Source: QV, ASB(f) ASB f/c....
Transcript of PowerPoint Tempate - Business Rural · AKL CHCH WGTN Other Nationwide Source: QV, ASB(f) ASB f/c....
Tourism TrumpingNick Tuffley – ASB Chief Economist
March 2017
2
Disclaimer
This document is a private communication and is not intended for
public circulation or for the use of any third party, without the
approval of ASB. The information contained in this document is
given with an express disclaimer of responsibility. No right of
action shall arise against ASB or its employees either directly or
indirectly as a result of this information. Those acting upon this
information do so entirely at their own risk. This information
does not purport to make any recommendation upon which you
may reasonably rely without taking further and more specific
advice.
3
Topics
• Global outlook, key export sectors
• NZ economic growth overview
• Inflation, interest rates and NZD
5
US Preside t Tru p’s pote tial poli ies• Fully policy details still to be announced.
• Cut personal income tax.
• Corporation tax to be reduced to 15% from 35%.
• Lift spending on domestic infrastructure.
• Review red-tape around the labour market and investment.
• Declare China as a currency manipulator.
• Increased protectionist policies.
• Tru p’s poli ies are ge erally o sidered to e i flatio ary.• The great unknown is the impact on global trade and growth.
6
French Presidential election 2017
7
French Presidential election 2017
• 2-step process
– Round 1: Sunday April 23. 11 candidates.
– If no candidate gains an absolute majority, a run-off is held:
– Round 2 Sunday May 7, with the top two facing off.
Round One Polls Round Two Polls
8
Broad global outlook
-2
0
2
4
6
8
85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17
NZ TRADING PARTNER ANNUAL GDP GROWTH
Source: Consensus Inc, Stats NZ, ASB
aapc
Av erage
2017 & 2018:
Forecasts
2016 Estimate
-6
-4
-2
0
2
4
6
8
10
Dec-00 Dec-04 Dec-08 Dec-12 Dec-16
NZ TRADING PARTNER GDP GROWTH
Source: Consensus Inc, Stats NZ, ASB
Asia ex-Japan
US
Australia
aapc
Euro area
9
Milk price forecast
• We revised our forecast back
down to $6.00/kg, following
greater than expected
production through the NZ
summer.
• However, we remain
optimistic heading into next
season.
• We are forecasting $6.75/kg
for 2017/18.0
1
2
3
4
5
6
7
8
9
10
05 06 07 08 09 10 11 12 13 14 15 16 17 18 Long Run
MILK PRICE AND DIVIDENDS(per kg milksolid)
Source: Fonterra, ASB
$
ASB Milk Price forecasts
Milk Price
Dividend
10
Tourism booming• Tourism numbers and spend
continue to lift strongly.
• Source of arrivals remains
broad, limiting risk of a
downturn.
• Capacity constraints could act
as a brake to growth.
170
190
210
230
250
270
290
310
05 06 07 08 09 10 11 12 13 14 15 16 17
NZ SHORT-TERM ARRIVALS(monthly, seasonally adjusted)
Source: Stats NZ
'000
Lions tour
RWC CWC
11
Tourism key markets
0
10
20
30
40
0
10
20
30
40
Jan 00 Jan 05 Jan 10 Jan 15
JapanChinaOther AsiaKorea
ASIAN VISITOR ARRIVALS
(Smoothed trend, 000's)
Source:StatsNZ, ASB
0
40
80
120
160
0
40
80
120
160
Jan 00 Jan 05 Jan 10 Jan 15
AustraliaAmericasEuropeAsia
VISITOR ARRIVALS(Smoothed trend, 000's)
Source:StatsNZ, ASB
12
World Masters Games – Auckland April 2017
• April 21-30.
• 27,000 athletes. 16,000 international, vs
11,237 at Rio Olympics 2016.
• Most aged 40-59, ave. income NZD145,000.
• International athletes expected to spend 9
days on holiday in NZ, post 10 days of games.
• $30 et oost to Au kla d’s e o o y.• 244,000 visitor nights in Auckland.
• Potential for further lift to tourism outside
Auckland.
13
British & Irish Lions Tour: 3/6 – 8/7
• 10 games– 3x Auckland, 2x Wellington,
1x Christchurch, Whangarei, Dunedin,
Rotorua, Hamilton (vs 11 in 2005).
Same number of tickets – 360k –available.
• 2005 tour saw additional 30,000
tourists (seasonally-adjusted), mostly
from Europe.
• NZ Treasury has warned GBP weakness
following Brexit could impact tourist
spend and tourist numbers.
• 2005 tour had economic benefit to NZ
of $135.2m (source: NZ Treasury).
14
NZ Overview
15
Strong population growth through migration
• Net migration at record highs.
• Fall in permanent departures
while Australian job
opportunities are muted.
• Increased permanent arrivals,
returning NZer’s from
Australia and skill shortages
attracting foreign labour.
• Students (Indian and Chinese)
as a % declining, replaced by
work visa entrants.
• Moderation expected, as Aus
outlook eventually improves
-40
-10
20
50
80
110
140
-40
-10
20
50
80
110
140
Jan-93 Jan-99 Jan-05 Jan-11 Jan-17
TOTAL MIGRATION(into NZ, annual totals)
Source: Stats NZ
'000s
Outflow
Inflow
Net Inflow
(f )
16
Housing market
• House price growth started to
slow in Auckland from mid-
2016, slight falls in near term.
• Most regions seeing price
growth slow since restrictions.
• New restrictions: flat/falling
prices in late 2016/early 2017,
slight bounce in 2017H1.
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18
REGIONAL HOUSE PRICE FORECASTS (annual growth)
AKL
CHCH
WGTN
Other
Nationwide
Source: QV, ASB(f)
ASB f /c
17
Growth moderated in 2015, back up in 2016-18
• 2016 saw some recovery from
a soft 2015, although growth
slowed into year-end.
• Low interest rates and past fall
in NZD will support growth
over 2017.
• Dairy recovery supportive.
• Population and income
growth to remain key supports
of NZ economy. -3
-1
1
3
5
7
-3
-1
1
3
5
7
Mar-89 Mar-94 Mar-99 Mar-04 Mar-09 Mar-14 Mar-19
NZ GDP GROWTH
Source: Stats NZ, ASB
%
(f)
%
Annual av erage %
Per quarter
18
Inflation, financial markets
19
Inflation: now back above 1%
-1
0
1
2
3
4
5
6
Jun-00 Jun-03 Jun-06 Jun-09 Jun-12 Jun-15 Jun-18
NZ CPI INFLATION
Source: Stats NZ, ASB
%
(f)
Annual %
quarterly change0
1
2
3
4
Mar-93 Mar-98 Mar-03 Mar-08 Mar-13 Mar-18
NZ CPI ANNUAL INFLATION3-year average
Source: Stats NZ, ASB
%
(f)
CPI Annual %
CPI Inflation Target Band
20
Interest rates low for a long time
• The OCR is comfortably on
hold now. High threshold for
further cuts.
• Market pricing of OCR hikes
partly reflects impact of
sudden change in global
outlook generated by Trump.
• We estimate the market has
got ahead of itself and pricing
will eventually soften to
reflect that.1.5
2.0
2.5
3.0
3.5
4.0
1.5
2.0
2.5
3.0
3.5
4.0
Sep-13 Aug-14 Jul-15 Jun-16 May-17 Apr-18 Mar-19
Source: ASB
% OCR FORECASTS
(ASB vs pricing of overnight index swaps) %
Current market pricing
ASB Economics Forecast (peak of 3.5% in 2022)
21
Summary
• International events likely to have a big influence on 2017.
• NZ economy set to pick up to 3.5% growth over 2017 & 2018.
• Tourism buoyant, but capacity constraints may limit growth.
• Growth will be supported by migration flows, construction, low
interest rates, real wage growth, tourism and dairy recovery.
• Key risks: Trump; Brexit fallout; European elections; higher NZD.
• Inflation expected to remain comfortably above 1%, but
downside risks remain.
• The RBNZ is expected to hold the OCR at 1.75% for the
foreseeable future. Market slightly ahead of itself.