New Zealand GDP

New Zealand

New Zealand: Economic growth steady in Q1 on the back of construction activity

June 19, 2014

In the first quarter, GDP increased a seasonally-adjusted 1.0% over the previous quarter, which matched the revised expansion observed in the fourth quarter (previously reported: +0.9% quarter-on-quarter). The print came in slightly below market expectations of a 1.1% expansion. Compared to the same quarter of the previous year, GDP increased 3.8% in Q1 (Q4: +3.3% year-on-year).

Q1’s expansion was driven by strong growth in construction, which expanded 12.5% in Q1 and came in significantly above the 0.8% growth tallied in Q4. In addition, positive growth was recorded in all other sub-sectors of the economy except for wholesale trade, which fell 1.5% in Q1. After construction, growth rates were the highest in mining and electricity, gas and water. In Q1, mining tallied a 6.5% expansion (Q4: +8.0% qoq) and electricity, gas and water recorded 1.5% growth (Q4: +2.2%).

On an expenditure basis, GDP grew 1.3% over the previous period in Q1, which marked an improvement compared to the 0.7% expansion recorded in Q4. The print mainly reflected an acceleration in government consumption (Q4: -0.5% qoq, Q1: +1.1% qoq) and in fixed investment (Q4: +0.5% qoq, Q1: 2.1% qoq). Conversely, private consumption recorded a flat reading in Q1, which was below the 1.2% expansion observed in Q4. The external sector deteriorated as exports growth fell moderately from 3.5% in Q4 to 3.1% in Q1, while imports grew 1.7% (Q4: +0.1% qoq). Consequently, the external sector’s net contribution to overall economic growth dropped from 1.1 percentage points in Q4 to 0.4 percentage points in Q1.

The Reserve Bank of New Zealand revised up its growth forecasts slightly in its June Monetary Policy Statement. The Bank now expects the economy to grow 3.1% in 2014 and 3.5% in 2015. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.2% in 2014, which is unchanged from last month’s forecast. For 2015, the panel sees the economy expanding 2.8%.

Author: Teresa Kersting, Economist

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New Zealand GDP Chart

New Zealand GDP Q1 2014

Note: Quarter-on-quarter changes of seasonally adjusted GDP in %.
Source: Statistics New Zealand and FocusEconomics Consensus Forecast.

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