NZ economy grows smaller-than-expected 0.5% in 1st quarter

  • NZ economy grows smaller-than-expected 0.5% in 1st quarter

NZ economy grows smaller-than-expected 0.5% in 1st quarter

"Much lower building activity combined with mixed results for the service sector took the shine off higher dairy production and saw a second quarter of moderate overall GDP growth", Statistics NZ's national accounts manager Gary Dunnet said in a statement.

The Reserve Bank of New Zealand chose to keep its key cash rate at the record low of 1.75% in its latest meeting in May.

The lack of reaction on the part of the New Zealand dollar to the figures suggested the market was taking a similar view.

Today's GDP figures followed on from the release of New Zealand's external accounts for the March year yesterday, which showed a current account deficit of 3.1 per cent, which is the same as the March 2016 year.

"Agriculture grew 4.3 percent due to higher milk production".

GDP figures out this morning are a reminder of the importance of focusing on policies that create and sustain economic growth, Finance Minister Steven Joyce says.

WELLINGTON-New Zealand's economy made a tepid rebound in the first three months of 2017, as weakness in building activity weighed on growth, keeping the economy out of the fast lane for another quarter.

"Moderate GDP growth over the last six months is a reminder that every economic gain is hard-won in what is still a challenging global environment", Mr Joyce says.

"It is still a challenging worldwide environment", said Mr Joyce.

ANZ and Westpac had forecast a much healthier growth rate of 0.8 per cent, though ASB had been on the mark with its forecast.

Specifically, building activity contracted by 2.1% quarter-on-quarter in the first quarter of the year, marking its first fall since June 2015. That helped offset contractions across all building and construction investment and an 18 percent decline in transport equipment investment. Food, beverage and tobacco manufacturing was also higher.

New Zealand's gross domestic product expanded 0.5 percent on quarter in the first three months of 2017, Statistics New Zealand said on Thursday. Dairy exports fell 11 percent in the March 2017 quarter, resulting in a build-up in dairy inventories.

Government data today showed business investment climbed 3.7 per cent in the year ended March 31 and is up 37 per cent since March 2010, just before the government announced plans to cut the then 30 per cent corporate tax rate.

Per-capita GDP has fallen in both of the past two quarters, he said. On an annual basis, the economy grew by 2.5%, below expectations and the previous quarter's 2.7%.

Exports of goods and services fell 0.4 percent, while imports of goods and services increased 1.3 percent, it said.