New Zealand Economy Rebounds Ahead of Election

By Ben Collins Features Dow Jones Newswires

New Zealand's economy rebounded in the second quarter after six months of lackluster progress, an indication that growth may be regaining momentum as the nation prepares to go to the polls Saturday in a tightly fought general election.

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Gross domestic product expanded 0.8% in the second quarter from the previous three months, compared with revised 0.6% gain in the January-March period, with strength in exports and domestic demand supporting growth.

Economists polled by The Wall Street Journal had expected the economy to grow by 0.75%, while the central bank had forecast an expansion of 0.9%.

On a year-over-year basis the growth was flat, with the economy expanding 2.5% in the second quarter compared with 2.5% in the first three months of the year. Average annual growth to the end of the first quarter slowed to 2.7% from a revised 2.9% for the 12 months through March.

"Demand for exports has resulted in strong production growth in manufacturing and service industries," said Gary Dunnet, national accounts senior manager at the statistics body.

The incumbent National party, led by the Prime Minister Bill English, has campaigned on his party's nine-year stewardship of the economy. While growth has been weaker since the end of 2016, the economy has generally outpaced most other developed nations in recent years.

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Despite high levels of consumer confidence, New Zealand's economy has been weighed down by temporary factors such as a recovery from a major earthquake that hit Kaikoura at the end of 2016, weather-affected dairy production and capacity constraints in its construction industry.

The emergence of new Labor Party leader Jacinda Ardern during the campaign has hauled the main opposition party back into contention, making the vote too close to call.

The campaign has divided the country between those who have benefited from the economy's relative strength -- fueled by a rapid expansion of the dairy industry, strong inbound migration and tourism -- and those who feel they have been left behind.

GDP per capita grew by 0.3% in the June quarter and even contracted late last year, while annual net migration to New Zealand -- a net exporter of jobs and skills as recently as 2012 -- hit 72,400 in the year to July, fanning criticism that the National party has simply fueled economic growth through an influx of people.

(END) Dow Jones Newswires

September 20, 2017 20:02 ET (00:02 GMT)