The latest gross domestic product numbers are expected to show a solid rebound as the country loosened its Covid-19 restrictions to close out 2021.
ANZ bank is predicting a rebound of 3.5 percent for the economy. (File image) Photo: RNZ / Dom Thomas
GDP figures for the three months ended December are set to be released on Thursday, with some banks predicting a quarterly growth of about 3.5 percent as activity recovered.
The economy shrank 3.7 percent in the 2021 September quarter as the whole country was in lockdown.
ANZ bank and Westpac are predicting rebounds of 3.5 percent and 3.8 percent respectively, while BNZ was more conservative at 3 percent.
But Infometrics chief forecaster Gareth Kiernan was even less optimistic, owing to the prolonged lockdown in our biggest economic centre.
"It is just a function of Auckland being 35-40 percent of the nationwide economy and we know those level three restrictions will have something of an impact on the economy's ability to operate," Kiernan said.
"Also additionally of course with the hard border around Auckland that will have impacted on some sort of business partly related to travel-related stuff."
For those reasons, he was forecasting GDP growth of 2.5 percent.
The fourth quarter GDP numbers would also paint a very different picture to what is happening at present.
"The economy performed really well in January from what we can tell. But since Omicron has come into the scene within New Zealand, we are seeing that impacting on activity. Spending was down by about 8 percent between January and February, as businesses were forced to cut back on some of their operations," Kiernan said.
"We've seen of course more than 10 percent of the workforce isolating either because they've had Omicron or they've been a close contact."
He said there was also a hesitancy to go out because of the risks of the virus.
It all added up to a potential slip for the first quarter of 2022.
The country's biggest bank, ANZ, offered similar views in its commentary around the fourth quarter GDP figures.
"Let's not get out the bubbly just yet," the bank said. "After all, these data are already ancient history in a rapidly changing and geopolitically tumultuous world.
"And while growth may well come in ahead of the Reserve Bank ... forecast of 2.3 percent [quarterly growth], with Omicron now rife, extreme inflation gobbling up household incomes, geopolitical tensions weighing on global sentiment, and housing having turned definitively downwards, strong growth in Q4 will only lower the hurdle for a technical recession over the first half of 2022."