New Zealand economy grows strongly


New Zealand's economy grew 3.2 percent in the year to the end of March

WELLINGTON, New Zealand (CNN) -- New Zealand's economy grew by a robust 1.1 percent in the March quarter and 3.2 per cent for the year to March 31, the government said Friday.

Statistics New Zealand also upgraded growth in the December quarter to 0.7 percent from its original figure of 0.6 percent.

It said the March gain was the fourth straight quarter of rises and reflected strong consumer spending, rising exports and a recovery in tourist numbers.

The GDP figures come as New Zealand prepares to go to the polls on July 27, with the Labour Party-led government of Prime Minister Helen Clark looking to win another three-year term.

Export volumes up

The government's statistics agency said export volumes rose 3.7 percent in the March quarter, following two quarters of decline.

"Both goods and services exports rose, the latter reflecting a recovery in inbound visitor numbers to New Zealand," it said.

"Dairy and seafood products were the key contributors to the increase in the volume of goods exported."

Finance Minister Michael Cullen said the figures were in line with forecasts and showed "an economy in good heart".

Rate rise likely

Most economists now expect the Reserve Bank of New Zealand to raise interest rates again when it meets next week.

The central bank has lifted rates three times since March 20, with the official cash rate now at 5.5 percent.(Full Story)

But a survey by the National Bank released Friday shows business confidence is falling, with a net 7 percent of respondents expecting the economy to deteriorate.

That compares with last month's survey, when a net 7 percent of respondents expected conditions to improve.

Regional analyst IMA Asia expects growth in New Zealand this year to be 2.8 percent, increasing to 3.1 percent next year.

But the Pacific Economic Outlook released in late May takes a more conservative view. It forecasts real GDP growth will be 2.2 percent this year, increasing to 2.5 percent in 2003.