New Zealand: Economic growth moderates in Q4
March 20, 2014
In the fourth quarter, GDP increased a seasonally-adjusted 0.9% over the previous quarter, which was below the revised 1.2% expansion observed in the third quarter (previously reported: +1.4% quarter-on-quarter), meeting market expectations. Compared to the same quarter of the previous year, GDP increased 3.1% in Q4 (Q3: +3.3% year-on-year). Q4's expansion was driven by strong growth in manufacturing. Accordingly, manufacturing increased 2.1% in Q4, which was above the 1.6% expansion tallied in Q3. In addition, positive growth was recorded in all other sectors of the economy except for agriculture, which fell 2.0% in Q4 following a massive post-drought rebound in Q3. Mining and electricity, gas and water had the highest growth rates at 9.4% and 3.7%, respectively. On an expenditure basis, GDP grew 0.6% over the previous period, which was below the 1.0% expansion recorded in Q3. The print mainly reflects a deceleration in fixed investment (Q3: +2.6% qoq, Q4: +0.4% qoq) and a contraction in government consumption (Q3: +2.1% qoq, Q4: -0.5% qoq). Conversely, private consumption increased 1.2% in Q4, which was stronger than the 0.4% expansion observed in Q3. In addition, the external sector improved as exports grew 3.1% in Q4 (Q3: -0.7% qoq), while imports grew 0.2%, well below the 4.1% increase recorded in Q3. Consequently, the external sector's net contribution to overall economic growth swung from minus 1.8 percentage points in Q3 to plus 0.9 percentage points in Q4. The Reserve Bank of New Zealand revised up its growth forecasts its March Monetary Policy Statement. The Bank now expects the economy to grow 3.0% in 2014 and 3.5% in 2015. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.1% in 2014, which is unchanged from last month's forecast. For 2015, the panel sees the economy expanding 2.7%.
Author: Armando Ciccarelli, Head of Data Solutions