WELLINGTON, March 19 (Reuters) - New Zealand's economy grew marginally in the fourth quarter but came in lower than expected, supporting the central bank's decision to keep rates on hold for now.
Official data out on Thursday showed gross domestic product rose 0.2% in the fourth quarter on the prior quarter, but was weaker than analysts' forecast of 0.4% and the Reserve Bank of New Zealand’s forecast of a 0.5% rise.
Annual GDP increased 1.3%, Statistics New Zealand data showed. The market had expected
a 1.7% increase.
It followed a downwardly revised annual increase of 1.1% in the third quarter.
Growth in New Zealand’s economy has started to show early signs of an improvement after an extended period of weak activity but there remains plenty of spare capacity. The country’s central bank, which has cut the official cash rate by 325 basis points since August 2024, opted to keep rates unchanged at 2.25% in February as it noted the economic recovery remained in the early stages and that growth was broadening. This data supports the central bank’s stance particularly as it predates the beginning of the Israeli-U.S. war on Iran and the resulting spike in oil prices.
"Rental, hiring, and real estate services was the largest contributor to the overall increase in GDP, up 0.8% in the quarter," said Stats NZ.
Statistics New Zealand added that construction was the largest downward contributor to GDP this quarter, down 1.4%, while the volume of building work put in place, a key input into how Stats NZ measures GDP, fell 3.1% in the December quarter.
(Reporting by Lucy Craymer; Editing by Stephen Coates)
