New Zealand: Economy slows down in fourth quarter
March 22, 2012
In the fourth quarter, GDP expanded a seasonally adjusted 0.3% over the previous period, which was below both the revised 0.7% increase recorded in the third quarter (previously reported: +0.8% quarter-on-quarter) and market expectations that had GDP growing 0.6%. Compared to the same period last year, GDP increased 1.8%, following an expansion of the same magnitude in the third quarter. In the full year 2011, the economy grew 1.4%, slightly faster than the 1.2% growth rate registered in 2010. The fourth quarter deceleration primarily reflected a slowdown in the retail, accommodation and restaurant sectors. In addition, fishing, forestry and mining decelerated from a 3.7% increase in Q4 to a 1.3% expansion in Q4. Meanwhile, manufacturing, transport and communications, as well as electricity, gas and water supply all showed contractions in the final quarter. The expenditure approach shows that GDP increased a seasonally adjusted 0.5% over the previous quarter (Q3: +1.0% qoq), which primarily reflected a slowdown in private consumption (Q3: +1.6% qoq; Q4: +0.8% qoq), as well as a contraction in government spending (Q3: +0.5% qoq; Q4: -0.7% qoq). In contrast, gross fixed investment swung from a 2.1% contraction in the third quarter to a 1.5% expansion in the fourth. Meanwhile, the external sector's net contribution improved in Q4, as exports of goods and services expanded 2.8% in the fourth quarter (Q3: +0.7% qoq), while imports contracted 2.9% (Q3: +2.6% qoq). In its March Monetary Policy statement, the Reserve Bank of New Zealand expects the economy to expand 3.1% this fiscal year (ending March 2013). For the fiscal year 2013, (ending March 2014), the Central Bank anticipates economic growth of 3.7%.
Author: Ricardo Aceves, Senior Economist