New Zealand: Growth accelerates in Q4 2018
March 19, 2019
According to data released by the Statistical Institute, the economy grew 0.6% in quarter-on-quarter seasonally-adjusted terms in the fourth quarter of last year, up from Q3’s 0.3% outturn and in line with analysts’ expectations. However, on a year-on-year basis, the economy slowed more than expected, coming in at 2.3%, which marks the lowest print in five years (Q3: +2.6% year-on-year). Looking at 2018 as a whole, GDP growth moderated to 2.8%, following 2017’s 3.1% expansion.
The fourth-quarter uptick was chiefly led by the service industry, which recorded the sharpest increase amid strong activity in the retail and accommodation sectors (Q4: +0.9% quarter-on-quarter seasonally-adjusted; Q3: +0.5% qoq s.a.). In addition, goods-producing industries rebounded from a quarter earlier (Q4: +0.2% qoq s.a.; Q3: -0.9% qoq s.a.), powered by sturdy construction activity. However, manufacturing and utilities supply contracted for a consecutive quarter, while primary industries contracted 0.8% in Q4, a marked contrast from Q3’s 2.3% expansion, owing to plummeting mining and agricultural activity.
On the expenditure side, quarter-on-quarter private consumption accelerated in the fourth quarter. In addition, fixed investment and government spending both rebounded in the same period. On the external side, exports bounced back in Q4, whereas imports contracted for a second consecutive quarter.
Growth is seen easing this year amid a broad-base deceleration of domestic demand and an uncertain international backdrop. Notably, investment is set to wane as tighter financial conditions and reduced profitability weigh on business sentiment. Meanwhile, the slowdown in China and Europe is set to erode demand for dairy products, New Zealand’s main export.
Author: Nicolás J. Aguilar, Economist