Growth in the NZ economy was a bit weaker than forecast in the 4th quarter of last year, but a booming services sector and solid household spending offset the impact of drought on the vital dairy industry and helped the New Zealand economy grow by just on 2.9% in 2017.
December quarter and 2017 data from the country’s statistics body yesterday showed annual GDP growth retreated from 4% in 2016, thanks mostly to the slowdown in the 4th quarter.
Statistics New Zealand figures show the economy grew by 0.6% in the final three months of 2017, instead of the forecast 0.8%.
The economy grew by 2.9% in the year to December for 2017, up from 2.7% in the year to September 30, 2017.
NZ growth was faster than Australia’s 0.4% quarter on quarter performance and 2.4% for the year.
NZ economists blamed a mix of election uncertainty, falling business confidence and dry weather which hurt the huge dairy industry especially.
The rural sector contracted at the end of 2017, potentially hit by New Zealand’s hottest summer on record.
Overall agricultural production fell by 2.7% with lower milk production hitting dairy manufacturing and dairy exports, which fell 4.4%.
Growth was driven mainly by services, which makes up around two thirds of GDP
Statistics NZ said business services grew by 2.3% in three months, led by computer system design and advertising and marketing while wholesale, retail, rental and real estate services also grew strongly during the period.
"Household spending was up 1.2 per cent in the December 2017 quarter, as households ate out more and spent more on groceries and alcohol," Statistics NZ said in a statement.
“This was reflected in the retail trade and accommodation industry, with activity in food and beverage services and supermarkets increasing."
Statistics NZ said GDP per person increased by 0.1 per cent in the final three months of 2017 and 0.7 per cent for the full year.
"This is the lowest rate of GDP per capita growth since 2011," Stats NZ said.
