New Zealand economy unexpectedly contracts in third quarter
2023.12.13 17:27
By Lucy Craymer
WELLINGTON (Reuters) – New Zealand’s economy unexpectedly contracted in the third quarter as a number of industries including manufacturing and construction saw activity slow and household spending eased.
Official data out on Thursday showed gross domestic product (GDP) fell 0.3% in the September quarter, lower than analysts’ forecasts of a 0.2% rise. It followed a revised 0.5% increase in the second quarter.
Annual GDP decreased 0.6%, Statistics New Zealand data showed. The market had expected an increase of 0.5%.
All goods-producing industries were down in the third quarter, led by a fall in manufacturing, said Ruvani Ratnayake, the national accounts industry and production senior manager at Statistics New Zealand.
The agency added that despite the overall fall in GDP, eight of the country’s 11 industry categories grew in the quarter with the strongest rises seen in healthcare and social assistance, rental, hiring and real estate services.
The central bank was forecasting quarterly growth of 0.3%, and the weaker-than-expected GDP will likely please the Reserve Bank of New Zealand (RBNZ), which has repeatedly said it needs slower economic growth to dampen inflation and inflation expectations.
The RBNZ has undertaken its most aggressive policy tightening since 1999, when the official cash rate was introduced, lifting it by 525 basis points since October 2021 to 5.50%.
In November, the central bank signalled it could hike rates further if it decided inflation and inflation expectations were not heading towards its target band of 1% to 3%.
