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New Zealand annual economic growth holds at five-year low

[WELLINGTON] New Zealand's economic growth rate held at a five-year low in the first quarter, leaving the door open for the central bank to cut interest rates again.

Gross domestic product (GDP) rose 2.5 per cent from a year earlier, matching the revised pace for the fourth quarter of 2018, which was the slowest annual growth since 2013

GDP climbed 0.6 per cent from the previous three-month period, Statistics New Zealand said Thursday in Wellington. Economists expected 0.6 per cent growth

The Reserve Bank of New Zealand (RBNZ) cut interest rates to a record-low 1.5 per cent in May, betting that extra stimulus will lift economic activity later this year and help get inflation back to its 2 per cent target while ensuring that employment growth doesn't falter. The central bank signaled further easing is possible, and most economists tip at least one more rate cut before the end of 2019.

The kiwi dollar rose after the report. It bought 65.62 US cents at 10.53am in Wellington from 65.35 cents immediately before the release. There is a more than 90 per cent chance of a rate cut by August, according to swaps data compiled by Bloomberg.

Quarterly growth was faster than the 0.4 per cent projected by the RBNZ in its May policy statement and led by a jump in construction, the statistics agency said. The central bank projects annual GDP growth will slow to 2 per cent by mid-2019 but then accelerate to more than 3 per cent by early 2020.