Powell speech takes center stage in Tuesday’s economic events
Investing.com-- New Zealand’s economy shrank more than expected in the second quarter as weak manufacturing activity and slowing export volumes largely offset middling growth in private spending.
Gross domestic product shrank 0.9% quarter-on-quarter, government data showed on Thursday. The print was weaker than expectations for a 0.3% drop, and largely reversed course from a 0.9% increase in the prior quarter.
GDP shrank 0.6% year-on-year, missing expectations that growth would remain unchanged. GDP had also shrunk 0.6% in the first quarter.
Manufacturing was the biggest contributor to overall GDP weakness, data showed, with weak production also factoring into softer exports.
The service industry saw some strength, with rental, hiring, and real estate services offering some support to GDP.
But services growth, coupled with some resilience in household spending, were insufficient in offsetting the decline in manufacturing and exports.
Weak economic growth is expected to elicit more interest rate cuts from the Reserve Bank of New Zealand, which slashed rates by a cumulative 250 basis points since late-2024.
The central bank has largely kept the door open for more rate cuts, citing weakness in the economy. Analysts expect at least two more 25 bps cuts this year.
New Zealand entered a technical recession in the third quarter of 2024, and had clocked mild economic growth over the past two quarters.