- Gary Dunnet, national accounts manager
New Zealand economy continued to grow in the second quarter, supported by a robust performance of the services sector and a recovery in the agricultural activity. The economy expanded 0.4% in the June quarter, compared with the 0.2% growth in the previous three-month period, Statistics New Zealand reported. The figure, however, missed the expected growth rate of 0.6%. Agriculture activity rose 3.0% in the March quarter, driven by increased dairy production, beef and lamb farming. At the same time, the service sector, which makes up around 70% of GDP, rose 0.5% over the quarter, with seven of the eight business industries enjoying expansion. On the year, economic activity rose 2.4%, slowing from a revised 2.7% in the first quarter, supporting the Reserve Bank of New Zealand's decision last week to cut the official cash rate for a third time in three months and to signal further reductions.
Most economists expect the OCR to be cut to 2.5% by the end of the year, with some predicting a record-low OCR of 2.0% by early next year. The RBNZ said in its quarterly Monetary Policy Statement that the annual average rate of GDP growth is expected to fall to just over 2% in 2015, down from over 3% last year.
© Dukascopy Bank SA