ASB economists question New Zealand GDP data as unreliable and seriously lagging?

The content of this article is reproduced from the public account: NZ Daily Finance

Economists at ASB Bank said that because the quarterly GDP data released by Statistics New Zealand (Stats NZ) is highly volatile, they will pay close attention to other “high-frequency data” to judge economic trends.

The latest GDP data released showed that the economy grew by 1.1% in the third quarter of 2025 (September quarter), while it fell by 1.0% in the second quarter (June quarter). The data was initially reported as a 0.9% decline and was later revised downwards.

In an economic research report titled “Special Topic on GDP”,ASB economist Wesley Tanuvasa pointed out that one of the drawbacks of New Zealand’s GDP data is the long lag between the time of release and the quarter covered.

He said: “For example, GDP data for the December 2025 quarter will be released on March 19, 2026, almost 12 weeks after the end of the quarter. In contrast, the United States usually releases preliminary estimates of GDP about four weeks after the end of the quarter, providing a more timely reference for economic activity.”

In theory, a longer release lag would give the bureau more time to make a more accurate judgment about the true state of the economy, thereby reducing the magnitude of subsequent revisions or quarterly swings, Tanuvasa said.

“But that hasn’t been the case recently, and one of the reasons is the way seasonal adjustments are handled,” he said.

“It would be easy to blame the Bureau for all the problems, but we won’t do that.”

Tanuvasa pointed out that another reason for the increase in GDP data volatility is the decline in the reliability of the “segmented data” that serves as the basis, such as the continued decline in questionnaire response rates.

He said: “Overall, although more data are available today than in the past, the reliability of the data may have decreased, especially in the aftermath of the COVID-19 epidemic.”

“For policymakers, ‘worse’ GDP data means the problem is magnified – it’s no longer a trade-off, but a double disadvantage: not only is the data lagging, but it’s a less accurate reflection of the economy.”

This further heightens the need to give higher weight to high-frequency economic activity indicators, he said.

Tanuvasa noted that the Reserve Bank of New Zealand (RBNZ) has been transparent in its use of these more timely (but incomplete) economic indicators.

For example, the New Zealand Bank of New Zealand lowered the official cash rate (OCR) in August 2024. This move was a clear deviation from its guidance in May 2024 (at that time, the OCR forecast still hinted at the possibility of an interest rate increase), and this decision was based on the judgment of a general deterioration in multiple high-frequency data.

“The signal-to-noise ratio of high-frequency data is low, but from an overall and directional perspective, these data can still provide valuable economic signals,” he said.

Tanuvasa recommends focusing on tracking high-frequency data including:

Monthly house sales data from REINZ, BNZ–Business NZ Manufacturing and Services Performance Index (PMI and PSI), Monthly Electronic Card Transactions data (ECT) from Statistics New Zealand, and monthly immigration data.He attached relevant data tables to the report.

Tanuvasa said that since the September quarter GDP data was released on December 18, a number of high-frequency data have improved.

Recent data, he said, “shows more of a tailwind than a headwind.”

“…our judgment is that the current economic conditions compared tocentral bank of new zealandThe forecast in the November Monetary Policy Statement (MPS) was stronger. “

The CPI inflation rate rose to 3.1%, which is higher thancentral bank of new zealandThe 1%–3% target range comes amid signs that some of the more “sticky” components of inflation are falling more slowly than previously assumed.

“This suggests that the ‘speed ceiling’ for the New Zealand economy may be lower than currently widely expected.”

Tanuvasa also noted that a stronger New Zealand dollar might help push down tradables (imported) inflation, but “much depends on whether the volatile U.S. policy environment continues to weaken the dollar.”

He said: “We believe that the uncertainty of this judgment is too high and the New Zealand Bank of New Zealand is unlikely to use it as a policy basis. We also do not agree with the view that the New Zealand election will prevent the OCR from increasing before November 7 – the central bank is independent and its assessment of the policy stance is equally independent.”

He concluded: “Taken together, stronger economic performance and higher inflation levels will advance the time for policy normalization. The key is when to start the interest rate hike cycle.central bank of new zealandIs it more inclined to tighten financial conditions through ‘verbal guidance’ and raise interest rates later, or choose to directly use more direct interest rate tools and increase the OCR at an earlier stage. “