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New Zealand economy unexpectedly expands in second quarter
Written by article default Thursday, 23 September 2010 05:52
According to a statement that was released today by the New Zealand economy, which is showing that the gross domestic product unexpectedly expanded at the slowest pace during the quarter of April to June, as the economic growth in New Zealand suffering a weakness even before the nation's worst earthquake during 80-years.The New Zealand economy issued its Gross Domestic Product reading (QoQ) concerning the second quarter, where the index expanded by 0.2%, compared with a pervious of 0.6 % revised to 0.5%, while the forecasted was 0.7%.
Moreover, The GDP (YoY) concerning the second quarter widened with 1.9% as a previous reading, while expectations referred to 2.5%.
With the starting inception of this month, the Reserve Bank of New Zealand announced its decision the borrowing cost for the month of September, where the bank decided to preserve the benchmark interest rate unchanged at 3% for the second consecutive month, as the economic recovery slowed due to the nation suffering from the worst earthquake in eight decades.
New Zealand shops and factories closed after the earthquake, which was the main reason behind the cut in power and damaged in more than 100,000 homes. Water and sewage lines were also destroyed in New Zealand's second largest city, reflecting the economy is likely to slow growth further during the third quarter, indicating that the Bank will leave the interest rate unchanged for the rest of the year.
Exports, which accounts for 30% of the economy, rose 1.3% from the first three months of the year, fueled by food, lumber, paper and machinery, while the New Zealand companies exported goods and produced in previous periods, leading to the inventories have declined.
On the other hand, the production is the main measure of gross domestic product in New Zealand, which declined as a result of a contraction in manufacturing and a fall in farm output as a summer drought affected milk volumes and livestock growth. Manufacturing output fell 4% in the quarter, led by a record fall in output from dairy and other food processing.
led by a record decline in
output from dairy and other food processing
Meanwhile, Fonterra Cooperative Group Ltd. is the world's largest dairy milk exporter in New Zealand, announced that it collected milk less than expected from the suppliers, after the North Island province of Waikato (which is the nation's biggest producing region) announced a drought-zone in April.
Today's report showed that farm production declined 2.1%, and there is an increase in output from the real estate, retailing and accommodation industries meant the services sector widened 0.4% from the first three months of the year.
The RBNZ Governor Mr. Alan Bollard raised the benchmark rate for the second consecutive time during the Bank’s meeting that was held during July; while he indicated that the outlook for economic growth has retreated along with household spending which subdued.
The New Zealand economy retail sales dropped during the month of July, as consumer spending retreated for the first time in three months. New Zealand's current account deficit widened to reach NZ$0.888 billion during the quarter ending June, compared with a previous surplus of NZ$0.176 billion.