NZ GDP Beats Forecasts, Easing RBNZ Growth Concerns

New Zealand's economy showed resilience in the second quarter, beating expectations and easing some of the Reserve Bank of New Zealand's (RBNZ) concerns about downside risks to growth. The country's GDP rose 0.2% quarter on quarter, ahead of the 0.1% forecast by analysts and well above the RBNZ's own projection of no growth at all.

This marked a slowdown from an upwardly revised 0.9% pace in the first quarter, previously reported as 0.8%, as the fallout from the US-Iran conflict weighed on confidence. Annual growth came in at 2.6%, comfortably above the 2.2% the market had expected.

Westpac said the data reinforced the message that New Zealand's economy had largely held its ground through the conflict, though it has not been completely unscathed. The RBNZ has already been hiking despite a soft growth outlook, lifting the official cash rate by 25 basis points earlier this month for a second consecutive meeting, to 2.75%, as inflation stayed above its target range.

The New Zealand dollar ticked up only slightly to ~0.5723 US dollars from 0.5718 on the data, with gains capped by the broader pressure the currency remains under following the Federal Reserve's rate hike this week.