New Zealand economic growth slows

Ronald C. Modra / Sports Imagery / Getty ImagesSlowing fast.
  • New Zealand economic growth slowed in early 2018 with real GDP increasing by 0.5%, down from 0.6% in Q4 2017.
  • Household consumption was flat, a result partially driven by the discovery of stinkbugs in auto imports.
  • At 2.7%, the annual growth rate was the weakest in nearly four years.

New Zealand economic growth slowed in early 2018.

According to Statistics New Zealand (StatsNZ), GDP grew by 0.5% in the March quarter in seasonally adjusted chain volume terms, down slightly on the 0.6% level seen in the final three months of 2017.

The result was in line with expectations.

Over the year, the economy grew by 2.7%, down from 2.9% in 2017.

While in line with expectations, it was the slowest annual expansion since the middle of 2014.

StatsNZ

This flow chart shows the contributions to quarterly growth from a production basis perspective.

StatsNZ

Reflecting still strong levels of population growth, real GDP growth er capita was flat over the quarter, down from 0.1% in the three months to December 2017.

“The New Zealand economy has lost some momentum in recent times, with growth in the last three quarters matching or barely exceeding population growth.” said Michael Gordon, Senior Economist at Westpac.

“We have been anticipating a period of subdued growth through the first half of this year, reflecting businesses’ uncertainty about the new Government’s policies.

“However, increased fiscal spending should provide a boost to activity from the second half of this year onwards.”

From an expenditure perspective, real GDP grew by a smaller 0.3% for the quarter, weighed down by flat household spending, the largest part of the New Zealand economy at around 60%.

The weakness in household consumption partially reflected temporary disruptions to auto imports due to the discovery of stinkbugs in a carrier in mid-February.

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