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NZ economy grows to signal end to recession
By Mantik Kusjanto |
September 24, 2009, Thursday
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Print Edition
Print Edition
New Zealand's economy unexpectedly grew in the second quarter, ending its longest recession on record and raising expectations the central bank may start raising interest rates as soon as January.
The New Zealand dollar jumped after data showed gross domestic product rose a seasonally adjusted 0.1 percent in the second quarter, compared with a revised 0.8 percent drop in the previous three months and ending five straight quarters of contraction.
Growth was driven by gains in domestic consumption and primary industries, including forestry and mining, which analysts said may prompt the Reserve Bank of New Zealand to reconsider its stated policy of keeping rates at record lows until late 2010.
"The market is going to continue to push for the bank to tighten policy much sooner than what the bank is currently stressing," said Deutsche Bank chief economist Darren Gibbs.
Markets now see an 80 percent chance of a quarter-point rate rise in January, up from less than 50 percent before the data, according to overnight indexed swaps.
The New Zealand dollar jumped after data showed gross domestic product rose a seasonally adjusted 0.1 percent in the second quarter, compared with a revised 0.8 percent drop in the previous three months and ending five straight quarters of contraction.
Growth was driven by gains in domestic consumption and primary industries, including forestry and mining, which analysts said may prompt the Reserve Bank of New Zealand to reconsider its stated policy of keeping rates at record lows until late 2010.
"The market is going to continue to push for the bank to tighten policy much sooner than what the bank is currently stressing," said Deutsche Bank chief economist Darren Gibbs.
Markets now see an 80 percent chance of a quarter-point rate rise in January, up from less than 50 percent before the data, according to overnight indexed swaps.
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