New Zealand economy picks up amid agricultural growth

[WELLINGTON] New Zealand's economic growth hit a two-year-high in the second quarter on the back of a strong performance from the agricultural sector, official data showed Thursday.

Statistics New Zealand said the economy expanded 1.0 per cent in the three months to June 30, the biggest quarterly rise since mid-2016.

The agriculture, fisheries and forestry sector was the standout performer, up 4.1 per cent, with mining the only industry among the 16 measured to contract.

The quarterly figure exceeded market expectations and put New Zealand's annual growth to the second quarter at an estimated 2.7 per cent.

Capital Economics' chief Australia and New Zealand economist Paul Dales said the surge in growth was probably temporary, citing favourable weather for farmers.

He believed it would moderate as the year progressed, resulting in the Reserve Bank of New Zealand keeping its base interest rate at 1.75 per cent "for a very long time yet".

"We still believe that the combination of low confidence, a subdued housing market and easing net migration will result in growth slowing further next year rather than accelerating as the RBNZ hopes," he said in a note to clients.

AFP