The expansion of New Zealand's economy decelerated more than forecast during the last quarter, due to the nation's worst drought in 30 years that curbed farm output, the Statistics New Zealand said in a report. New Zealand's gross domestic product grew 0.3% to $37.1 billion over three months ended March 31, down from a pace of 1.5% in the December period. Analysts, however, expected the economy to register a 0.6% expansion, while the Reserve Bank itself projected a 0.5% pace in its June monetary policy statement published last week. Report also unveiled that agriculture, forestry and fishing sectors shrank 4.8%, dragged by the arid climate conditions, trimming around 0.3 of a percentage point from economic output.
The nation's central bank expressed concerns that tight fiscal consolidation is one of the main opposing factors to the country's steady growth trajectory. Last month's report, that unveiled the government's budget, shows that it aims to bring the economy back into an operating surplus already by 2013-2014 financial year, by implementation of higher effective tax rates, a series of government spending, as well as the partial sale of state assets, which floated on the stock exchange in recent months. By conducting these reforms the government plans to raise NZ$1.7 billion in revenue.
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