New Zealand surprised analysts with a shrinking economy in the first quarter blamed on plummeting exports.
Overall output fell by 0.2% in the quarter, Statistics New Zealand said on Thursday.
Primary industries drove the decrease in gross domestic product (GDP), down 1.2% in the quarter. Goods producing industries also experienced a slight decline, down 0.1%.
“We saw lower output in the food, beverage, and tobacco manufacturing sub-industry; and the agriculture, forestry, and fishing industry,” Stats NZ national accounts industry and production senior manager Ruvani Ratnayake said.
“These declines corresponded to falls in related exports categories, including dairy products; meat products; agriculture and fishing products; and other food, beverage and tobacco products.”
Annual GDP rose 1.2%, below a Reuters poll forecast of a 2.7% rise. The Reserve Bank of New Zealand last month forecast growth for the March quarter at 0.7%.
That was below economists’ median expectations of a 0.6% rise and significantly below the 3.0% rise in the December quarter, when the country had benefitted from moving out of pandemic-related lockdowns.
Domestic spending was robust and many analysts believe the country will dodge a recession as activity rebounds from coronavirus lockdowns.
New Zealand’s economy in the first quarter was hurt by the country’s first significant nationwide outbreak of coronavirus infections as the Omicron variant spread. Even so, the data did show that domestic demand remained strong.
- George Russell, with Reuters