Services buoy up New Zealand economy amid dairy decline

10:26 | 20/03/2016 Cooperation

Strong expansion in the services sector helped to offset plunging dairy prices to boost New Zealand's economic growth at the end of last year, the government statistics agency said Thursday.

Services buoy up New Zealand economy amid dairy decline

Gross domestic product (GDP) rose by 0.9 percent in the December 2015 quarter, according to Statistics New Zealand.

"The service industries grew 0.8 percent overall," national accounts senior manager Gary Dunnet said in a statement.

"Business services in particular posted a strong increase, as well as retail trade and accommodation."

The growth in the service sector, which makes up 70 percent of the economy, was reflected in increased household spending on services, which was up 1 percent.

Spending was up on restaurant and ready-to-eat meals, accommodation, and international air passenger services.

The increase in household spending contributed to the 1.1-percent increase in the expenditure measure of GDP.

Business investment fell by 2.6 percent, after a strong rise in the September 2015 quarter.

Although construction-related investment rose, this was offset by lower investment in plant, machinery, equipment and transport equipment.

However, annual growth last year edged down from 3.7 percent in 2014 to 2.5 percent.

"This reflects the slower first half of 2015," said Dunnet.

Finance Minister Bill English said the quarterly growth compared positively with 0.6 percent in Australia, 0.5 percent in the United Kingdom and 0.3 percent in the United States, as well as the 0.3-percent average in the Organization for Economic Co-operation and Development group of developed countries.

"Despite the dairy industry doing it tough at the moment, we are in the unusual situation of solid growth, more employment and higher wages, but very low inflation," English said in a statement.

The outlook remained for continued moderate economic growth, with the Treasury forecasting growth averaging around 3 percent over 2016 and 2017./.

 

Source: Xinhua

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