"The main driver behind the GDP growth was construction, which rose 4.9%. This was the strongest quarterly growth for the industry since March 2014"
- Statistics New Zealand
New Zealand's economy expanded at a faster pace than expected in the first quarter as healthcare made a surprisingly strong contribution to the nation's economic output, while construction continued to prop up the economy amid a housing boom. According to Statistics New Zealand, the South Pacific economy grew 0.7% in the three months to March, compared with economists' expectations for a 0.5% growth, but down from 0.9% in the final quarter of 2015. However, the economy expanded just 0.1% when population increases were accounted for. When measured on an annualized basis, growth accelerated from 2.3% in the December quarter to 2.8% last quarter.
New Zealand's housing shortage, ultra-low interest rates, and rapidly growing house prices have underpinned demand for construction activity over the last few years. Services increased 0.8% over the reported period, led by 2.7% surge in healthcare and residential care, as well as a rise in retail trade and accommodation. Offsetting these gains in production was a decrease in primary industry activity, which slipped 0.4% over the three-month period. Manufacturing also made a negative contribution to GDP, dropping 0.4% last quarter.
© Dukascopy Bank SA