New Zealand recorded faster than expected economy growth rate for the last quarter of 2015. Its business services, retail, accommodation and construction sectors boosted the gross domestic product (GDP) growth rate, surpassing the forecasts made by Reuters and Reserve Bank. However, the overall growth for 2015 was 2.3 percent, down from 4.1 percent in 2014.
The GDP growth rate rose 0.9 percent during three months ending December 2015 from previous quarter, according to the Statistics New Zealand. The 0.9 percent GDP growth rate was higher than Reuters' forecast of 0.6 percent and Reserve Bank's projection of 0.7 percent.
The last quarter of 2014 recorded an encouraging growth rate of 2.3 percent, which was again above the forecasts. New Zealand's economy grew 2.5 percent for the whole year. Services industries contribute 70 percent to the GDP has underpinned the growth, as reported by Newshub.
Its retail trade and accommodation sector grew 1.7 percent, financial and insurance services expanded 1.2 percent while professional, scientific, technical, administration and support services rose 1.5 percent.
Channel News Asia further adds that New Zealand's economy grew 2.3 percent in 2015 , but down from 4.1 percent in 2014. The country, which is the world's largest dairy products exporter, recorded NZ$11.5 billion ($7.8billion) dairy exports in 2015 as against NZ$15.6 billion exports in 2014. New Zealand's exports were high in 2014, during which prices were ruling higher owing to China-driven boom in demand.
Statistics New Zealand said "The increase in business services was driven by increased advertising, market research and management services, as well as scientific, architectural and engineering services."
New Zealand's Finance Minister Bill English expressed his satisfaction over the GDP performance despite some adverse conditions in the dairy sector. New Zealand is feeling pressure from global milk supply glut.
Bill English said "Despite the dairy industry doing it tough at the moment, we are in the unusual situation of solid growth, more employment and higher wages, but very low inflation. The outlook remains for continued moderate economic growth... forecast growth averaging around three per cent over calendar 2016 and 2017."
Reserve Bank of New Zealand's (RBNZ) Governor Graeme Wheeler forecasts drop in cash rate as global outlook is weaker. He also holds view that local inflation may also decline. Domestic inflation was at 16-year low of 0.1 percent in 2015 underscoring the Reserve Bank's decision to cut interest rate last week. The Reserve Bank of New Zealand last week raised its forecast to 2.6 percent on annual growth rate for 2016, according to Financial Review.
New Zealand's currency dollar was up at 67.72 US cents. However, the primary sector declined 1.4 percent during last quarter of 2015 following the drop in agriculture, forestry and fishing segments. But, on annual basis, agriculture, forestry and fishing production rose marginally by 0.1 percent in 2015. New Zealand's economy also suffered from lower production of beef and sheep.
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