New Zealand: Economic growth soars in first quarter
June 21, 2012
In the first quarter, GDP expanded a seasonally adjusted 1.1% over the previous quarter. The figure was well above the revised 0.4% increase observed in the fourth quarter of 2011 (previously reported: +0.3% quarter-on-quarter) and exceeded market expectations that had GDP growing 0.5%. The print represents, in fact, the fastest pace in five years. Compared to the same quarter last year, GDP grew at the fastest pace since the third quarter of 2010 (Q4 2011: +1.9% year-on-year; Q1 2012: +2.4 yoy). The first quarter acceleration mainly reflected a pick-up in growth in the manufacturing sector, which expanded 1.8% over the previous quarter, contrasting the 1.9% contraction observed in the fourth quarter. In addition, the primary sector also improved, with mining surging 3.4% in the first quarter (Q4: +2.1% qoq) and agriculture rising 2.1% in Q1 (Q4: +0.9% qoq). The expenditure approach shows that GDP increased a seasonally adjusted 0.8% over the previous quarter (Q4: +0.4% qoq), primarily reflecting faster growth in fixed investment (Q4: +1.6% qoq; Q1: +1.7% qoq) and government consumption (Q4: -0.7% qoq; Q1: +0.5% qoq). In contrast, the external sector deteriorated as exports of goods and services declined 1.7% over the previous quarter (Q4: +2.9% qoq), while imports swung from a 2.2% contraction in Q4 to a 4.1% expansion in Q1. Consequently, the external's net contribution to overall growth dropped from a 1.8 percentage-point contribution to a 2.1 percentage-point detraction in the first quarter. In its June Monetary Policy statement, the Reserve Bank of New Zealand expects the economy to expand 2.0% this fiscal year (ending March 2013). For the fiscal year 2013, the Central Bank anticipates economic growth of 3.0%. Meanwhile, in its latest budget draft, the government expects economic growth of 2.6% this year and 3.4% in 2013.
Author: Ricardo Aceves, Senior Economist