New Zealand: Economy maintains pace of expansion in last quarter of 2015 and beats expectations
March 16, 2016
In the final quarter of 2015, GDP increased a seasonally-adjusted 0.9% over the previous quarter, which matched the 0.9% expansion registered in the previous quarter and overshot the 0.7% rise the markets had expected. Compared to the same quarter of the previous year, New Zealand’s GDP expanded 2.3% in Q4 (Q3: +2.3% year-on-year) and brought the economy to expand 2.5% in 2015 as a whole.
Looking the economic sectors, the agricultural sector deteriorated further in the last quarter of 2015. It decreased 1.6% in Q4 (Q3: -0.4% quarter-on-quarter), which marked the steepest contraction in two years as the sharp fall in commodities prices—particularly in dairy products—last year took a heavy toll on the sector. Industry increased a timid 0.3% in Q4, which was a third of 0.9% growth rate observed in Q3. Weak growth in the industrial sector reflected the fact that strong activity in construction more than compensated for a contraction in manufacturing. Services virtually maintained the pace of growth in Q4, supported by healthy growth in financial services.
On an expenditure basis, GDP increased 1.1%, which came in below the 1.4% rise tallied in Q3. Q4’s print showed that both private consumption (Q4: +1.1% qoq; Q3: +0.8% qoq) and government spending (Q4: +0.4% qoq); Q3: +0.3% qoq) gained momentum toward the end of 2015. That said, fixed investment swung from a 2.6% increase in Q3 to a 1.1% contraction in Q4. On the external front, the contribution from net exports fell in Q4 as exports slowed sharply compared to the previous quarter, while imports rebounded.
Author: Ricardo Aceves, Senior Economist