New Zealand growth slows in Q1 amid down­turn fears

The China Post - - WORLD BUSINESS -

New Zealand’s eco­nomic growth eased to a two-year low in the Jan­uary-March quar­ter, of­fi­cial data showed Thurs­day, with an­a­lysts warn­ing of worse to come as com­mod­ity prices tum­ble.

Gross do­mes­tic prod­uct (GDP) was 0.2 per­cent in the three months to March 31 — well down on mar­ket ex­pec­ta­tions of 0.6 per­cent — while an­nual growth was 3.2 per­cent, Sta­tis­tics New Zealand (SNZ) said.

Econ­o­mists said the fig­ures meant the cen­tral bank would con­tinue a round of rate cuts launched ear­lier this month, which was the first since 2011.

The quar­terly fig­ure was the low­est since early 2013, re­flect­ing a large 2.9-per­cent fall in pri­mary in­dus­tries.

“Oil and gas were big fac­tors in lower GDP growth this quar­ter,” SNZ ac­counts man­ager Gary Dun­net said.

“There was less ex­trac­tion and ex­plo­ration as in­ter­na­tional prices fell ... (and there was) lower milk pro­duc­tion in a quar­ter that had drought con­di­tions and lower dairy prices.”

The drag on growth was par­tially off­set by a 6.1-per­cent rise in re­tail trade and ac­com­mo­da­tion, fu­eled by New Zealand’s co­host­ing of the Cricket World Cup with Aus­tralia.

But Cap­i­tal Eco­nom­ics se­nior Asia economist Daniel Martin said the dairy sec­tor was the key to New Zealand’s long-term prospects, which were not look­ing rosy af­ter a 50-per­cent slump in prices since last year.

“The out­look re­mains clouded by the fall in dairy prices late last year — it will take time for the in­di­rect im­pact on real GDP from the de­te­ri­o­ra­tion in the terms of trade to be felt,” he said.

“Mean­while, the con­struc­tion boom looks set to fade and ex­ports are likely to be un­der­mined by weaker growth in Aus­tralia’s econ­omy.”

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