Gross domestic product declined 0.9 percent from the third quarter, when it fell a revised 0.5 percent, Statistics New Zealand said in Wellington today. That was less than the median estimate of a 1.1 percent drop in a Bloomberg survey of nine economists.
New Zealand is mired in its worst recession in more than three decades as manufacturing contracts, export demand slows and the housing market slumps. Central bank Governor Alan Bollard said this month the economy won’t begin growing until the second half of 2009, a sign he will keep cutting interest rates to revive domestic demand.
Bollard reduced the official cash rate to a record-low 3 percent on March 12. He will pare the rate by at least a quarter-point to 2.75 percent at his next review on April 30, according to 12 of 13 economists surveyed by Bloomberg.
The economy shrank 1.9 percent from a year earlier, today’s report showed. In 2008, gross domestic product rose 0.2 percent from 2007, the weakest annual-average growth since 1998. The quarterly decline was the most since the third quarter of 1992.
New Zealand joined Japan, Europe and the U.S. in sinking into a recession last year as the global credit crisis buffeted consumer and business confidence and cooled global trade. The U.S. economy contracted 1.6 percent in the fourth quarter, Japan shrank 3.2 percent and Australia declined 0.5 percent.
The International Monetary Fund said yesterday New Zealand’s economy will shrink 2 percent in 2009 because households are constrained by debt and workers are worried they may lose their jobs. About 57 percent of consumers expect the economy will worsen this year, according to a Westpac Banking Corp./McDermott Miller survey published March 25.
Household spending, which makes up 60 percent of the economy, was unchanged in the fourth quarter after falling for the first nine months of the year. Purchases of durable items such as furniture and home appliances declined 1.4 percent, today’s report showed. Sales of food and other so-called non- durable goods also fell. Spending on services increased, led by domestic air travel.
Total investment dropped 5.3 percent, led by spending on new housing, which slumped 14 percent in the fourth quarter, the fifth straight decline.
Business investment fell 1.8 percent as companies purchased fewer vehicles, plant and machinery. Commercial construction rose.
Exports of goods and services declined 3.3 percent in the quarter amid lower shipments of meat, fish and logs plus reduced less spending by visiting tourists. Import volumes declined 0.6 percent, led by passenger cars.
Output from goods-producing industries slipped, led by a 3.8 percent drop in manufacturing and declining home building. Primary production rose, driven by output from dairy farms that offset a decline in mining. Service industries output increased, led by finance and insurance.