New Zealand Economic Growth Slowed Before Coronavirus Hit
New Zealand’s economy cooled in the fourth quarter of 2019 to post the weakest growth since 2013
(Bloomberg) -- New Zealand’s economy cooled in the fourth quarter of 2019, leaving it in a weaker position before the arrival of the coronavirus pandemic this year.
Gross domestic product rose 1.8% from a year earlier, the weakest annual growth since the fourth quarter of 2013 and down from 2.3% in the previous three months, Statistics New Zealand said Thursday in Wellington. GDP climbed 0.5% from the third quarter, matching economists’ median estimate.
New Zealand is bracing for recession as the coronavirus outbreak forces countries to close their borders and roils global financial markets. The government this week said a recession this year is almost certain and announced a NZ$12.1 billion ($7 billion) support plan, while the central bank has slashed interest rates.
The New Zealand dollar, which has plunged to an 11-year low on the virus, was little changed after the GDP report. It bought 57.35 U.S. cents at 11:58 a.m. in Wellington.
Before the virus outbreak, the RBNZ and many economists expected the fourth quarter to be the low point in the GDP growth track. The government announced a NZ$12 billion infrastructure package in December and the RBNZ’s final decisions on bank capital requirements weren’t as onerous as feared, fueling hopes of an economic upturn at the time.
“Economic activity re-accelerated again in the second half of the year, buoyed by supportive monetary policy and increases in fiscal spending,” Westpac senior economist Satish Ranchhod said. “Today’s result confirms our view that the economy was picking up late last year. Nevertheless, we still expect a significant deterioration in economic activity over the coming year.”
Westpac today projected a domestic recession with GDP falling 3.1% in the nine months ending Sept 30. ASB Bank and ANZ Bank estimate the contraction over 2020 will be at least 3%.
Fourth-quarter growth was faster than the 0.4% the RBNZ projected in its February monetary policy statement. Activity was driven by a lift in the services industries including real estate and transport, and increased export volumes, the statistics agency said.
Other Details
- Output from farming fell, offset by improved production from forestry and mining
- Manufacturing fell
- Investment declined, led by commercial building and transport equipment
- Household spending increased at a slower pace, led by demand for electrical goods
- Exports gained 1.1%, led by dairy
- GDP per capita grew 0.2% from the third quarter, when it rose 0.5%
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