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NZ Economy Grows Modestly, Rate Hike Bets Fade
19 Mar
Summary
- New Zealand's GDP grew 0.2% in Q4, below expectations.
- Annual GDP increased 1.3%, falling short of market forecasts.
- Rental, hiring, and real estate services contributed most to GDP growth.
New Zealand's economy demonstrated a modest gain in the fourth quarter, with gross domestic product rising by 0.2% compared to the previous quarter. This figure fell short of the 0.4% forecast by analysts and the 0.5% anticipated by the Reserve Bank of New Zealand (RBNZ). Annually, GDP increased by 1.3%, also below the expected 1.7% rise.
The weaker-than-expected GDP data provides the RBNZ with greater flexibility in its monetary policy decisions. Following this release, the New Zealand dollar saw a decline as markets adjusted their expectations regarding potential interest rate increases. Rental, hiring, and real estate services emerged as the leading contributors to the quarterly GDP increase, up by 0.8%.
Conversely, the construction sector was the largest detractor, experiencing a 1.4% decrease. The overall economic recovery in New Zealand is still in its early stages, with considerable spare capacity remaining. The central bank has maintained the official cash rate at 2.25% since February, a decision that predates the recent conflict in the Middle East and the subsequent surge in oil prices.
