NZ Economy Slightly Grew by 2.9 pc due to Low GDP Data in Q4

The economic growth of New Zealand for the final quarter of 2017 showed weaker figures than the expected as the hot and dry weather made an impact towards the agricultural industry. The average market expectation for the GDP growth was 0.8 percent but the data from the Statistics New Zealand indicate 0.6 percent growth. The economic growth for the year came in at 2.9 percent, which is lower to 1.1 percent prior a year. While the GDP based on the current prices accounted for $283 billion. Per capita GDP declined during the September quarter and showed 0.1 percent growth versus 0.2 percent in the quarter before.

Westpac Banking Corporation projected that growth will remain neutral for this year due to changes in government policies, especially the cooling housing market predicted to slow down balance activity. Economists said that New Zealand is in the tail-end of its economic cycle.

Jeremy Couchman, Kiwibank Senior Economist, talked about the monetary policy implications and that figures are not a major concern for the central bank as long as the numbers coincide with the prospect of the Reserve Bank that the country will increase in the near trend. The Kiwibank is predicted to raise its official cash rate in May 2019, which is the most hawkish choice in the market.

Despite the optimistic condition of the service industry in the previous quarter, it affected the overall economic growth led by dilemma in the primary sector.  Also, the hot-dry climate brought an unfavorable impact towards the agriculture output which fell to 2 percent. On the other hand, household expenditure rose to 1.2 percent to  $160 billion which contributed 56 percent on the annual GDP. The increase was caused by higher expenses of consumers on foods, groceries and beverages and this further influenced the retail trade and accommodation industry as the supermarkets, food and drinks surged. In addition to it, the imports for capital goods, especially aircraft, factory equipment, and ICT escalated.

The New Zealand dollar dropped to 0.25c versus its American counterpart upon the publication of data.