Drought slows New Zealand economic growth in 2Q
WELLINGTON, New Zealand (AP) — A drought slowed New Zealand’s economic growth in the second quarter but economists predict the economy will pick up again in the coming months.
Statistics New Zealand announced Thursday the economy grew 0.2 percent in the April-June quarter from the previous quarter, the slowest growth since the fourth quarter of 2010. Compared to the same quarter a year ago, the economy gained 2.5 percent.
The results, however, were better than expected, and the New Zealand dollar, already up after the Federal Reserve’s announcement that that it would maintain its stimulus program, rose about 0.5 cents after the figures were released to trade at 83.90 U.S. cents.
New Zealand relies on dairy and meat exports to power its economy. The agency said agricultural activity was down 6.4 percent in the quarter and 10.4 percent from its peak in December as the effects of a Southern Hemisphere summer drought rippled through the economy.
A mild, wet winter since has given farmers plenty to cheer about.
Business services, construction, retail and accommodation all posted gains of more than 2 percent in the quarter.
Finance Minister Bill English said he expects strong growth to return in the September quarter. In a release, he said it was “pleasing” that despite the severe drought, New Zealand continues to grow faster than most developed nations.
The opposition Labour Party said the result shows New Zealand relies too heavily on agriculture and that the economy’s underlying performance remains lackluster.