So, GDP is out today. The market expects a 1% fall, ANZ has gone as far as 1.2% (I’m talking about a quarterly seasonally adjusted fall – none of this annualised rubbish).
Now, I’m not so sure. Yesterday’s current account deficit came in on the money, but the deficit as a % of GDP was lower than expectations. There are three possibilities:
- The GDP deflator is going to be mighty strong (even with inflation pressures tumbling and the TOT falling),
- December activity is above expectations,
- Previous activity has been revised up (at least within the last year).
Now, it is dodgy trying to get a feeling out the the BOP figures for what GDP is – but with current estimates I could only get a small GDP fall to justify a 8.9% current account deficit. Combined with the hours worked revision today’s decline might be relatively small.