New Zealand's September quarter GDP (gross domestic
product) was not as strong as it looked but there was no
denying the economy was gathering momentum, BNZ senior
economist Craig Ebert said yesterday.
Rebounding dairy production drove a 1.4% increase in GDP for
the September 2013 quarter - the biggest increase since the
December 2009 quarter, Statistics NZ figures showed.
A strong increase in dairy production was the main
contributor to a 17% rise in agriculture, which makes up
about 5% of the New Zealand economy.
Mr Ebert said the economy was eyeing a ''genuinely'' strong
rate of expansion for next year, underscoring the upside risk
around the official cash rate.
''We remain of the view the Reserve Bank will wait until its
March monetary policy statement before actually increasing
its cash rate while using the January 30 OCR review to set
That view was supported by the fact the New Zealand dollar
did not drop on news of the United States Federal Reserve
reducing its support to the US financial markets, he said.
The Reserve Bank would probably be annoyed. It had been,
rightly or wrongly, waiting for the Fed to taper to take
pressure off the kiwi dollar.
''But it would seem the market will have none of it, instead
looking to the reason for the taper - an improving US economy
- and increasingly robust New Zealand economic indicators in
order to maintain a bid on the New Zealand dollar. And who
can blame them?''
The third quarter detail was volatile and, on balance, not
nearly as impressive as the headline results, Mr Ebert said.
While everyone was expecting a bounce-back in rural
production from the drought-affected first half, few would
have picked the 17% quarterly jump.
Statistics NZ acting national accounts manager Steffi
Schuster said dairy farming had bounced back from the drought
''The increase in agriculture is the largest in more than 25
years, as good weather boosted production well above the weak
June quarter,'' she said in a statement.
Statistics NZ said dairy product manufacturing also increased
during the quarter, which contributed to a 1.5% rise in total
Finance Minister Bill English said it was pleasing to end the
year with more positive news after robust forecasts in the
half-year update released this week.
''New Zealanders' hard work is now starting to pay dividends.
Despite the worst drought for several decades earlier this
year, New Zealand has one of the faster-growing developed
economies in the world.''
On Wednesday, the ANZ confirmed business confidence was at
its highest level since February 1999, with manufacturing
confidence hitting a 15-year high.
The current account deficit was half what it was five years
ago and the Government was on track to fiscal surplus in
2014-15, he said.
''However, it is early days. The Government was elected to
provide conditions for higher long-term growth for New
Zealanders and their families.
"There is a long way to go before we have locked that in.''