March 2005 Monetary Policy Statement Economic Projections 1 - PowerPoint PPT Presentation

Economic projections March 2005 Monetary Policy Statement Economic Projections 1 presentation March 2005 MPS (Ref #1498154 v1 0)

Outline 1.Assumptions • Inflation judgement retained 2. First pass projection 3. Special topics • Wages • Inflation expectations • NZ Current Account deficit Economic Projections 2 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.1: Output gap & Non-tradables inflation % % GDP - deviation from trend 3 6 (advanced 2 quarters) 5 2 4 1 3 0 2 Median -1 non-tradables 1 inflation (RHS) -2 0 -3 -1 Economic Projections 3 1994 1996 1998 2000 2002 2004 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.2: 90-day rates % BP 10 200 9 150 8 100 7 50 6 0 5 -50 4 -100 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass (LHS) Dec-04 MPS Difference (RHS) Economic Projections 4 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.3: TWI Index Index 70 70 65 65 60 60 55 55 50 50 45 45 97 98 99 00 01 02 03 04 05 06 07 Economic Projections 5 Mar-05 first pass Dec-04 MPS presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.4: 5-year swap rate Index Index 8.5 8.5 8.0 8.0 7.5 7.5 7.0 7.0 6.5 6.5 6.0 6.0 5.5 5.5 97 98 99 00 01 02 03 04 05 06 07 Economic Projections 6 Mar-05 first pass Dec-04 MPS presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.6: Exports (% of potential GDP) % of GDP % of GDP 35 35 34 34 33 33 32 32 31 31 30 30 29 29 28 28 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 7 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.7: Dubai Oil price $US per barrel $US per barrel 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 8 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.8: Imports (% of potential GDP) % of GDP % of GDP 40 40 38 38 36 36 34 34 32 32 30 30 28 28 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 9 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.9: Terms of trade Index Index 1.15 1.15 1.10 1.10 1.05 1.05 1.00 1.00 0.95 0.95 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 10 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.10: Current account balance % of GDP % of GDP -2 -2 -3 -3 -4 -4 -5 -5 -6 -6 -7 -7 -8 -8 97 98 99 00 01 02 03 04 05 06 07 Economic Projections 11 Mar-05 first pass Dec-04 MPS presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.12: House price inflation % % 25 25 20 20 15 15 10 10 5 5 0 0 -5 -5 -10 -10 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 12 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.13: Residential investment (% of potential GDP) % of GDP % of GDP 7.5 7.5 7.0 7.0 6.5 6.5 6.0 6.0 5.5 5.5 5.0 5.0 4.5 4.5 4.0 4.0 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 13 presentation March 2005 MPS (Ref #1498154 v1 0)

Consumption (% of potential) Ann. av g % Qtrly % growth 7 3 6 2 5 4 0 3 2 -2 1 0 -3 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Quarterly growth: Mar-05 first pass (RHS) Economic Projections 14 presentation March 2005 MPS (Ref #1498154 v1 0)

Participation rate % % 68.0 68.0 67.5 67.5 67.0 67.0 66.5 66.5 66.0 66.0 65.5 65.5 65.0 65.0 64.5 64.5 97 98 99 00 01 02 03 04 05 06 07 Economic Projections 15 Mar-05 first pass Dec-04 MPS presentation March 2005 MPS (Ref #1498154 v1 0)

Participation rate – 20 – 24 year olds % % 84 84 82 82 80 80 78 78 76 76 74 74 72 72 70 70 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Particpation rate, 20 - 24 year olds Economic Projections 16 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.15: Unemployment rate % % 8 8 7 7 6 6 5 5 4 4 3 3 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 17 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.16: Wage inflation % % difference 3.0 1.00 2.5 0.80 2.0 0.60 1.5 0.40 1.0 0.20 97 98 99 00 01 02 03 04 05 06 07 APC: Mar-05 first pass APC: Dec-04 MPS QPC: Mar - 05 (RHS) Economic Projections 18 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.17: Business investment (AAPC) Ann. av g % Ann. av g % 20 20 15 15 10 10 5 5 0 0 -5 -5 -10 -10 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 19 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.18: Govt expenditure (% of potential GDP) % of GDP % of GDP 23.0 23.0 22.0 22.0 21.0 21.0 20.0 20.0 19.0 19.0 97 98 99 00 01 02 03 04 05 06 07 Mar-05 first pass Dec-04 MPS Economic Projections 20 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.20: GDP growth (AAPC) Ann. av g % Ann. av g % 6 6 5 5 4 4 3 3 2 2 1 1 0 0 -1 -1 97 98 99 00 01 02 03 04 05 06 07 Mar-05 First pass Dec-04 MPS Economic Projections 21 presentation March 2005 MPS (Ref #1498154 v1 0)

Figure 6.1.21: Output Gap Ann. av g % Ann. av g % 3 3 2 2 1 1 0 0 -1 -1 -2 -2 -3 -3 97 98 99 00 01 02 03 04 05 06 07 Mar-05 First pass Economic Projections Dec-04 MPS 22 presentation March 2005 MPS (Ref #1498154 v1 0)

Tradables and non-tradables breakdown Ann % Ann % 5 5 4 4 3 3 2 2 1 1 0 0 -1 -1 -2 -2 -3 -3 97 98 99 00 01 02 03 04 05 06 07 Sep-04 first pass non-tradables inflation Sep-04 first pass tradables inflation cpidot4 Economic Projections 23 presentation March 2005 MPS (Ref #1498154 v1 0)

CPI Inflation Ann % Ann % 4.0 4.0 Policy window 3.5 3.5 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 96 97 98 99 00 01 02 03 04 05 06 07 Mar 05 (Dec int rate) Mar-05 first pass Dec04 Economic Projections 24 presentation March 2005 MPS (Ref #1498154 v1 0)