The New Zealand economy grew by 0.2% in the March quarter, beating our forecast of a modest decline. However, the details don’t change our view of the underlying strength of activity.
Key results
- Quarterly change: +0.2% (last: -0.1%, Westpac f/c: -0.2%, market f/c: +0.1%, RBNZ +0.2%)
- Annual change: +0.3% (Last -0.3%, Westpac f/c -0.2%, RBNZ +0.3%)
The New Zealand economy skirted another decline in the March quarter, with GDP rising by 0.2%. That was broadly in line with what the market and the Reserve Bank were expecting, though it beat our bottom-of-the-range forecast of a 0.2% decline.
The details were mixed in much the way that we expected them to be – half of the 16 industries saw gains of varying degrees, while the other half saw declines. The strongest gains were in electricity (due to a higher share of cheaper hydro generation during the quarter), food manufacturing (reflecting increased milk production and a rebound in drinks) and forestry. There were declines in non-food manufacturing, construction, and professional services.
For our part, the forecast miss wasn’t very illuminating. Much of it came from the ‘unallocated’ category, which alone contributed 0.3 percentage points to GDP growth over the quarter. This group includes items such as duties on imports, which saw an unusually large rise over the quarter.
Given the ongoing strength in migration-led population growth, GDP was still down by 0.3% in per-capita terms. Indeed, this was the sixth straight quarterly decline on this measure.
Overall, there is little in today’s report to alter our view of the state of the economy (the forecasts in our May Economic Overview were prepared on the basis of a 0.1% rise in GDP for this quarter, before it was revised down). We expect growth to remain minimal over the course of this year, and indeed recent indicators suggest that the June quarter is shaping up to be quite soft.
