New Zealand returns to growth in Q4 as Covid-19 restrictions ease

[WELLINGTON] New Zealand's gross domestic product (GDP) rose 3.0 per cent in the fourth quarter from the previous quarter, led by the services sector as Covid-19 restrictions eased, official data showed on Thursday.

The figure was slightly lower than expected by economists polled by Reuters, who had forecast production-based growth of 3.2 per cent for the quarter.

The rise follows a revised 3.6 per cent fall in the September quarter, when lockdowns curbed activity.

Annual GDP rose 3.1 per cent, below a Reuters poll forecast of a 3.3 per cent rise.

Economic growth improved in the fourth quarter as New Zealand's largest city, Auckland, moved out of a lengthy lockdown that had hit retail, manufacturing, construction and recreational activities in the prior quarter. Other parts of the country had also experienced shorter lockdowns in the third quarter.

Consumer and government spending were strong as was business investment, while trade was a drag as the country sucked in more imports, the data showed. There was also a big drag from inventories as companies ran down stocks to meet demand, according to the data.

New Zealand's economy is being hit again this year as the country experiences its first significant nationwide outbreak of coronavirus infections.

Although there are few restrictions in place, growing case numbers and hospitalisations have tempered people's desires to go out while sickness and isolation requirements are hurting some manufacturing sectors.

Concerns of an overheated economy and rising inflation have prompted the Reserve Bank of New Zealand (RBNZ) to raise interest rates three times in recent months. The market expects further hikes in the coming months. REUTES