Westpac said it expects a 0.2% rise in New Zealand's June quarter gross domestic product (GDP), with the economy weathering the oil shock better than anticipated, though seasonal distortions are expected to subtract about 0.3 percentage points from the reported figure, pointing to an underlying pace of growth of about 0.5%, according to a Wednesday report by the bank.
The bank said retail spending, particularly on hospitality, was the most visible casualty of the Middle East conflict as higher fuel prices squeezed household budgets, though construction, wholesaling and agriculture continued to benefit from low interest rates and strong demand for key exports.
Westpac believes that a 0.2% rise would be stronger than what the Reserve Bank of New Zealand assumed in its September Monetary Policy Statement.
Westpac also noted that while a stronger result could ease some committee members' concerns about downside risks to growth, they are likely to be more focused on upcoming inflation data in deciding their next move.
