New Zealand Economy grows faster Than Q3 Forecast

New Zealand's economy grew faster than what was expected by economists in the third quarter due to greater spending in the manufacturing and retail sector.

According to the Financial Review, the country's gross domestic product went up 0.9 percent in the third quarter, which is faster than the 0.3 percent growth in the previous quarter. This expansion is 0.8 percent larger than the forecasted growth by 16 economists from Bloomberg. Meanwhile, the country's GDP grew 2.3 percent compared to the same period in the previous year.

This faster economic growth emphasizes the Reserve Bank of New Zealand's projection to bring inflation rate down to its target zone without additional interest-rate cuts. The country's central bank expects the economy to grow bigger next year with the increase in export prices, better business confidence, lower borrowing costs, and higher numbers of immigrants.

Nasdaq reported that the services sector went up 0.9 percent in the third quarter due to increase in business services, accommodation, transport services, and retail trade. Manufacturing also went up 2.8 percent, making it the biggest quarterly gain since almost three years ago.

Meanwhile, the Financial Times wrote that the strong gains in the wholesale, manufacturing, and transport sector helped offset the weak performance in the dairy and construction businesses. According to Capital Economics Australia & NZ economist Paul Dales the dairy and construction industry in the country will have a bad effect on the economy in 2016.

He said, "We doubt growth will accelerate next year. The full impact on the economy from the fall in dairy prices has yet to come through and we still believe that the construction sector won't be as large a support as widely expected."

Just this week, New Zealand Treasury brought its growth forecast down to 2.1 percent for this year to the first quarter of 2016, from a previous projection of 3.1 percent in May. The treasury also lowered its growth projection for 2016 to 2.4 percent from 2.8 percent. However, it expects to have a strong growth in the second half of the following year.