GDP preview March 2008

March quarter GDP numbers are out on Friday. Westpac has a good preview of the upcoming GDP numbers here. They, the Bank, and the market are picking a 0.3% fall in quarterly GDP over the March quarter.

Remember, GDP=C+I+G+X-M (consumption + investment + government spending + exports – imports). We “know” that growth(X-M)<0 and growth(C)<0. With benefit spending falling and limited policy initiatives over the March quarter growth(G)=small if not negative. Also with residential and non-residential wpip coming in negative it appears that growth(I)<0. This is enough to give us a pretty negative result.

However, Investment may surprise if stock levels have risen significantly. For example, the Tui oilfields produced a bunch of oil of March, but the timing of Easter made it difficult for them to ship the stuff out – knocking down exports (X) but potentially leading to growth in stocks.

Update:  For some reason I forgot to mention the downside.  Given how weak partial indicators have been, a fall of 0.6% could be on the cards – however, a bigger fall than that would concern markets.  Note that we had a 1% lift in December, so a 1% fall would put us back to where we were in September (in seasonally adjusted terms).

What do you guys think – will we see a negative quarter, will we see another one over June?

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