The strong rise in New Zealand’s GDP in Q2 nearly returned output to its pre-virus path despite the headwinds from low net migration and the slump in foreign tourism. So while GDP plunged in Q3, we still think the RBNZ will be comfortable raising rates in October. Meanwhile, the lockdowns in Australia will probably cause the unemployment rate to rise in the months ahead. But we doubt the rate will surge as high as the RBA expects. Our bullish view on the labour market underpins our non-consensus forecast that the RBA will lift rates in early 2023.
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