World Economy

New Zealand posts lowest quarterly growth in five years

Key Points
  • Statistics New Zealand figures out on Thursday showed gross domestic product grew 0.3 percent in the three months to the end of September, coming off a surprise 1 percent recorded in the previous quarter.
  • Low business confidence combined with a subdued housing market, easing migration and U.S.-China trade tensions, have all raised risks for New Zealand's growth outlook. 
Dairy cows graze at a farm that supplies to Fonterra Cooperative Group in Hamilton, New Zealand.
Brendon O'Hagan | Bloomberg | Getty Images

New Zealand slumped to its lowest quarterly economic growth in five years, as manufacturing, services and agriculture all slowed down after showing surprising strength in the previous quarter.

Statistics New Zealand figures out on Thursday showed gross domestic product grew 0.3 percent in the three months to the end of September, coming off a surprise 1 percent recorded in the previous quarter.

The growth figure was well below expectations of 0.6 percent by 10 economists polled by Reuters.

The New Zealand dollar dropped from US$0.6794 by more than a quarter of a U.S. cent to US$0.6764, a three week low, following the announcement.

Annual growth was put at 2.6 percent, against analysts' forecasts of 2.8 percent.

"The largest contribution to the downturn in goods-producing industries was manufacturing, with food manufacturing down significantly," Stats New Zealand national accounts senior manager Susan Hollows said in a statement.

Primary industries grew 2.2 percent, while growth in service industries slowed to 0.5 percent. The goods-producing industries fell 1.0 percent, dragging down overall growth this quarter, the statement said.

Mining rose 12 percent, partly recovering from the sharp fall in the June quarter.

Low business confidence under Prime Minister Jacinda Ardern's Labour Party-led coalition, combined with a subdued housing market, easing migration and U.S.-China trade tensions, have all raised risks for New Zealand's growth outlook. 

Governor Adrian Orr has said the next policy move would depend on how the economy fared, with the benchmark rate held at a record-low 1.75 percent since late 2016. 

New Zealand's Treasury department last week trimmed the country's growth forecast for 2019 and flagged a smaller surplus as it cautioned of risks to the economy from global trade frictions and slowing immigration.

The country's current account deficit widened to its largest in nine years in the third quarter, official statistics showed on Wednesday.