New Zealand GDP misses

New Zealand GDP misses

Looking ahead, "we expect growth to remain at a more subdued pace this year, as the new government's policies - particularly around cooling the housing market - are expected to be a drag on activity on balance, at least initially", said Gordon.

The economy, as measured by gross domestic product (GDP), grew 0.6 percent in the December 2017 quarter, Stats NZ said today.

"The New Zealand economy appears to have lost some momentum over the course of the past year", Westpac says in an economic note.

Per Capita GDP grew 0.7% over the year, the weakest result since 2011.

"The effects of higher fiscal spending are more likely to be felt in 2019 and beyond".

"The economy is not firing on all cylinders, but neither is it rolling over to any worrying degree".

"At this point in the cycle, that is nothing to be scoffed at".

New Zealand inflation is running at 1.6%, so like its Australian counterpart, the bank is under no pressure to try and nip cost pressures before they get out of hand.

In terms of monetary policy implications, Kiwibank Senior Economist Jeremy Couchman says the numbers won't worry the Reserve Bank, as it remains in line with the central bank's view that the economy is growing near trend.

Hot, dry weather appeared to have a negative impact this quarter on agriculture production, which fell 2%. Growth was driven by increases in the service industries but was tempered by falls in the primary sector.

Statistics NZ said wholesale, retail, rental and real estate services also grew strongly during the period. Falling milk production was reflected in lower dairy manufacturing and dairy exports.

StatsNZ said household expenditure - the largest part of the New Zealand economy at around 60% - grew by 1.2% over the quarter. "This fuelled increased retail trade activity, with food and beverage services and supermarkets experiencing growth", it said.

Meanwhile, imports of capital goods such as aircraft, factory equipment, and ICT increased considerably this quarter.

The New Zealand dollar has fallen following the release of the report, trading at.7308 against the U.S. dollar, a decline of 0.3%. "This was reflected in a 2.1 percent rise in investment of fixed assets".