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New Zealand's economy grew slightly faster than expected in 1st quarter 2016

Xinhua, June 16, 2016 Adjust font size:

New Zealand's economy grew slightly faster than expected in the quarter to the end of March, with gross domestic product (GDP) up 0.7 percent, the government statistics agency said Thursday.

The rise, which compared with an increase of 0.9 percent in the December 2015 quarter, was driven by the construction and health industries, according to Statistics New Zealand.

"The main driver behind the GDP growth was construction, which rose 4.9 percent. This was the strongest quarterly growth for the industry since March 2014," national accounts senior manager Gary Dunnet said in a statement.

Rising demand saw service industries grow 0.8 percent, with the health and retail trade industries leading the overall increase.

"We saw a larger population reflected in the rise in health care and consumer spending. When the rising population is taken into account, our GDP per capita rose 0.1 percent on the previous quarter," Dunnet said.

Strong tourist arrivals also supported the growth in service industries, reflecting a 4.9-percent rise in tourist spending.

Annual GDP growth for the year ended March 2016 edged down to 2.4 percent while the size of the economy in current prices was 249 billion NZ dollars (176.31 billion U.S. dollars).

Finance Minister Bill English said that while the dairy sector continued to be under pressure, other sectors were performing well and contributing to an overall solid rate of economic growth.

New Zealand's annual growth rate was in the top 10 of the OECD (Organisation for Economic Co-operation and Development) group of developed nations and compared to 2 percent in the United Kingdom and United States, 3.1 percent in Australia, 1.1 percent in Canada and 1.8 percent across the OECD.

"The outlook remains positive. Treasury's Budget forecasts see the economy continuing to grow at 2.8 percent on average through to 2020," English said in a statement.

Unions and opposition lawmakers said the GDP growth of 0.1 percent on a per capita basis meant ordinary people were falling behind overall economic growth.

"Right now Kiwis are working extremely hard, but they're playing catch up," said Grant Robertson, finance spokesperson for the main opposition Labour Party.

"The economy simply isn't keeping up with population growth, which has seen a net 70,000 people arriving in the country in the past year," Robertson said in a statement.

An economic note from the ASB Bank said the growth was stronger than the market median expected, and slightly stronger than the Reserve Bank of New Zealand (RBNZ) forecast this month.

The ASB still expected the RBNZ to cut the official cash rate by 25 basis points to 2 percent in August, followed by a further cut to 1.75 percent later this year. Endit