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[WELLINGTON] New Zealand's economic growth eased to a two-year low in the January-March quarter, official data showed on Thursday, in a result set to strengthen the case for more interest rate cuts.
Gross domestic product (GDP) was 0.2 per cent in the three months to March 31 - well down on market expectations of 0.6 per cent - while annual growth was 3.2 per cent, Statistics New Zealand (SNZ) said.
It said the quarterly figure was the lowest since early 2013, reflecting a large 2.9 per cent fall in primary industries.
"Oil and gas were big factors in lower GDP growth this quarter," SNZ accounts manager Gary Dunnet said.
"There was less extraction and exploration as international prices fell... (and there was) lower milk production in a quarter that had drought conditions and lower dairy prices." Dairy accounts for a third of New Zealand's exports, meaning small fluctuations in the sector can have major fallout on the economy.
The drag on growth was partially offset by a 6.1 per cent rise in retail trade and accommodation, fuelled by New Zealand's co-hosting of the Cricket World Cup with Australia.
The tepid overall growth will be closely scrutinised by the Reserve Bank of New Zealand, which this month cut rates for the first time in four years amid near-stagnant inflation and a slump in dairy prices.
The bank said it was open to further cuts after trimming the base rate 0.25 points to 3.25 percent, and the GDP data could provide the trigger.
The New Zealand dollar fell 0.52 US cents to 69.05 US cents after the weaker-than-expected figures, as markets factored in the likelihood of another rate cut.