New Zealand Economy Expands

March 29, 2010

New Zealand's economy continued to expand in the fourth quarter as the country's economic recovery gathered momentum. Statistics New Zealand said Thursday that real, seasonally adjusted production-based gross domestic product expanded 0.8% on the quarter in the three months ended Dec. 31, after it expanded 0.3% in the third quarter, revised from a 0.2% expansion. "Strong manufacturing activity contributed to growth in the December 2009 quarter," said National Accounts manager Rachael Milicich. "This growth reflects both increased demand and the need to replenish manufacturing inventories that have recently been run down."The economy technically pulled out of the recession in the second quarter of last year. The five-quarter streak of contractions was the longest downturn since the recession caused by the first oil shock in the mid-1970s. Earlier this month, the Reserve Bank of New Zealand, which this month forecast the economy would expand 0.6% in the fourth quarter, held the Official Cash Rate at a record low 2.5%, and reiterated guidance that it likely would begin to tighten monetary policy with rate increases around midyear. Manufacturing activity rose 4.5%, the first increase since the December 2007 quarter and was led by food, beverage and tobacco manufacturing. Overall activity in goods-producing industries increased 3.0% in the December quarter. Activity in the primary industries fell 1.3% in the December quarter, following a 3.0% increase in the previous quarter. The fishing, forestry and mining industries were the main drivers of the decline, Statistics New Zealand said. Based on the expenditure measure, GDP expanded 0.8% on quarter against a 0.2% expansion in the third quarter.