We hold a muted consumer outlook for New Zealand on the back of tepid consumer sentimentreadings. We forecast real private consumption growth to remain flat over our forecast period due to debtservicing. With that said, positive economic growth and favourable labour dynamics will buoy consumptionover 2017.
We forecast New Zealand's real GDP to slow down from 4.0% in 2016 to 3.1% in 2017. Record-lowinterest rates and continuing immigration from Asian countries continue to support sub-sectors, which relyon big-ticket items such as housing, transportation and electronics. However, growth in private consumptionis set to plateau during our forecast period: we are forecasting a slower 3.0% y-o-y real growth in privateconsumption in 2017, down from 4.2% in 2016.