Bounce back in activity unlikely

Both the Australian and New Zealand economies failed to regain any momentum at the end of 2017 with GDP rising by a slower than expected 0.6% q/q in New Zealand and just 0.4% q/q in Australia. Admittedly, some of this weakness can be explained by temporary factors that are unlikely to persist. For instance, the unusually dry weather at the end of last year triggered a sizeable contraction in agricultural production in New Zealand. That said, the recent flow of economic data has been fairly mixed for both economies and so a strong rebound in activity seems unlikely.