NZ Economy Grows 0.2%, Despite Fuel Price Shock

The New Zealand economy experienced a modest growth of 0.2% in the June quarter, according to Stats NZ data. This growth rate is in line with expectations and represents a mixed bag, as nine out of 16 industries showed increases.

The strongest sectors were construction, manufacturing, and wholesaling, which led the growth. The surge in house building drove construction up 2.7%, while government services grew 2% and wholesale trade rose 1.3%. However, consumer spending and transport activity were weaker, with road transport and support services falling 1.7%.

Stats NZ spokesperson Jason Attewell noted that the growth rate reflects mixed results, with increases in nine of 16 industries. The country's purchasing power (disposable income) fell 0.4% for the quarter, but is still 2.5% ahead of a year ago. Economists expect growth to continue unevenly through to the end of the year and gather more momentum next year.

The Reserve Bank has signalled that it will raise the official cash rate (OCR) further to combat 4% inflation, but is also balancing the need to support the economic recovery. The New Zealand economy has escaped significant damage from global events, including the Middle East war and spike in fuel prices.