New Zealand’s economy looks positive in uncertain 2019

Significance

The RBNZ’s no-change stance reflects major world central banks’ recent retreat from tightening. While current New Zealand economic growth is firm, the RBNZ and the government are concerned about the slowing global economy and potential disruption from Brexit and the US-China trade standoff.

Impacts

• To strengthen commercial banks’ resilience, the RBNZ may double tier one capital reserves requirements; tier two could go.
• Robertson’s second budget on May 30 will further the “wellbeing” agenda, widening criteria for assessing government management.
• The wellbeing criteria will include assessing environmental, human and social capital.
• Wellington wants a New Zealand-UK free trade deal post-Brexit, but this will depend on the UK-EU withdrawal deal’s detail.