New Zealand returns to growth in Q4 as COVID restrictions ease

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Pedestrians walk past a sailboat passing Wellington’s Central Business District (CBD) in New Zealand, July 2, 2017. REUTERS/David Gray

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WELLINGTON, March 17 (Reuters) – New Zealand’s gross domestic product (GDP) returned to growth in the final quarter of 2021 as the economy emerged from COVID-19 lockdowns, and economists said the The data confirmed expectations that the central bank would raise interest rates further.

Production based on output rose 3.0% in the quarter, Stats NZ reported on Thursday. That was slightly below median economists’ expectations of a 3.2% rise and a sharp turnaround from a revised 3.6% drop in the September quarter, when shutdowns dampened the activity.

Last month, the Reserve Bank of New Zealand (RBNZ) forecast growth of 2.3% for the December quarter.

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“The fourth quarter GDP data reflects a robust, albeit very stimulated, economy,” ANZ economists said in a report.

Although there were a number of uncertainties over the outlook, the main concern was rising inflation in New Zealand which would force the RBNZ to tighten policy further, they added.

Annual GDP rose 3.1%, slightly below a Reuters poll forecast of a 3.3% rise.

The RBNZ has already raised interest rates three times since October.

“Given that the rebound in activity in the fourth quarter exceeded RBNZ expectations, today’s data will keep the Bank on its way,” Ben Udy, an economist at Capital Economics, said in a statement. a rating.

OMICRON OUTBREAK

Economic growth improved as New Zealand’s largest city, Auckland, emerged from a long lockdown that had hit retail, manufacturing, construction and leisure activities in the previous quarter . Other parts of the country also saw shorter shutdowns in the third quarter.

Consumer and government spending was strong in the fourth quarter, as was business investment, while trade was a drag as the country sucked in more imports, the data showed. Inventories were also held down sharply as businesses reduced inventories to meet demand.

New Zealand’s economy is hit again this year as the country experiences its first major national outbreak of coronavirus infections as the Omicron variant spreads.

While there are few restrictions in place, rising numbers of cases and hospitalizations have tempered people’s desire to get out while sickness and isolation requirements hurt some manufacturing sectors.

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Reporting by Lucy Craymer; Editing by Karishma Singh and Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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