New Zealand: Economy grows at fastest pace in three years
March 21, 2013
In the final quarter of 2012, GDP expanded a seasonally adjusted 1.5% over the previous quarter, which represents a marked acceleration over the 0.2% increase observed in previous period and the fastest pace recorded since the last quarter of 2009. The print also exceeded market expectations, which had the economy growing 0.6%. Compared to the same period the year before, GDP quickened from a 1.9% increase in Q3 to a 3.0% expansion in Q4. In the full year 2012, the economy expanded 2.5%, above the 1.4% increase showed in 2011.
According to the statistical institute, the largest contributors to growth in Q4 were the agricultural sector, which increased 2.6% over the previous period (Q3 2012: -2.4% quarter-on-quarter), retail trade and accommodation (Q3: -0.5% qoq; Q4: +2.3% qoq) as well as wholesale trade (Q3: -0.6% qoq; Q4:+2.1% qoq). In addition, construction increased 1.8% in the fourth quarter, driven by infrastructure projects in the Canterbury area.
On an expenditure basis, GDP grew 1.4% in Q4, faster than the 0.5% increase recorded in the previous period. The figure mainly reflected faster growth in private consumption (Q3: 0.0% qoq; Q4: +1.6% qoq) and a rebound in fixed investment (Q3: -2.1% qoq; Q4: +2.2% qoq). On the external side, exports of goods and services decelerated from a 4.2% increase in Q3 to a 0.9% expansion in Q4, while imports dropped 2.0% in Q4, contrasting the 2.1% expansion in Q3. As a result, the external sector's net contribution to overall economic growth improved from 0.6 percentage points in Q3 to 1.0 percentage points in Q4.
In its March Monetary Policy Statement, the Reserve Bank of New Zealand (RBNZ) expects the economy to expand 2.9% in the fiscal year 2013 (ending March 2014). For fiscal year 2014 (ending March 2015), the RBNZ sees economic growth at 3.2%. FocusEconomics Consensus Forecast panellists expect the economy to grow 2.7% this year, which is unchanged from last month forecast. For 2014, the panel sees the economy expanding 2.8%.
Author: Ricardo Aceves, Senior Economist