NZ economy expands 0.2%, weakest quarterly growth in 2 years
NZ economy expands 0.2%, eking out weakest quarterly growth in two years; kiwi falls
By Jonathan Underhill
June 18 (BusinessDesk) - New Zealand’s
$239 billion economy grew at its weakest quarterly pace in
two years, driven by a dairy-led contraction in agriculture
and the impact on the mining sector of a drop in oil and gas
activity. The New Zealand dollar fell.
Gross domestic
product grew 0.2 percent in the first three months of the
year, according to Statistics New Zealand. That was a third
of the growth forecast by the Reserve Bank and bank
economists. The economy grew at an annual 3.2 percent, just
below expectations. The local currency fell as low as 69.09
US cents, from 69.56 cents immediately before the 10:45am
release. It was recently trading at 69.14 US
cents.
Weak growth may stoke speculation the Reserve
Bank will cut the official cash rate again in coming months
after last week’s quarter-point reduction to 3.25 percent.
Reserve Bank governor Graeme Wheeler cited the slump in
global dairy prices and the impact on the terms of trade in
last week’s monetary policy statement, estimating
farmers’ incomes in the 2014/15 season would be down about
$7 billion.
Agricultural industries contracted 2.3
percent in the quarter, reflecting lower milk production
that was driven by drought conditions in some regions and
lower dairy prices. In this week’s GlobalDairyTrade
auction, dairy prices fell to their lowest levels in almost
six years.
The mining sector shrank 7.8 percent, “due to decreased exploration activity, and oil and gas extraction,” the government statistician said. “There was less extraction and exploration as international prices fell.”
The combined 2.9 percent decline in primary industries more than offset gains in business services, up 2.1 percent, retail trade and accommodation, which rose 2.4 percent on the back of tourist spending, and a 2.5 percent increase for transport, postal and warehousing, led by international air transport.
Retailing and
accommodation recorded annual growth of 6.1 percent, the
fastest in almost a decade, helped in the quarter by
international events such as the Cricket World Cup and
Chinese New Year. International tourist spending rose 2.3
percent in the latest quarter.
The expenditure measure of GDP grew just 0.1 percent in the first quarter, slowing from a revised 1.2 percent increase three months earlier. Household consumption rose 0.7 percent, led by spending on durable goods, and exports of goods and services gained 1.5 percent. Imports of goods and services rose 1 percent.
Inventories grew by $106 million, reflecting a build-up in agriculture and forestry. Investment in fixed assets fell 1.9 percent.
(BusinessDesk)