WELLINGTON: New Zealand's economy grew more slowly in the second quarter, suggesting the near decade-high annual rate is the peak of the current cycle, allowing the central bank to sit on the sidelines for an extended period.
The economy grew a seasonally adjusted 0.7 percent in three months to June 30, taking the annual rate to 3.9 percent, the fastest since second quarter 2004, Statistics New Zealand figures showed on Thursday.
The South Pacific economy has been a leader among developed economies over the past year, but the drive from a booming dairy industry, and a surging construction sector, showed signs of easing. Analysts surveyed by Reuters expected a quarterly rise of 0.6 percent for an annual rate of 3.8 percent, while the Reserve Bank of New Zealand (RBNZ) forecast 0.8 percent.
"It's in line with our expectations and shows a bit of a deceleration after three very strong quarters," said Ben Jarman, economist at JPMorgan.
"While inflation hasn't taken off as yet, this is still an economy that is running strongly and presents a challenge to manage. To us, that's consistent with the RBNZ being on pause for now, but does not signal the end of the tightening cycle."
The New Zealand dollar inched up to around $0.8090 from $0.8083 before the data. The slowdown was not unexpected after three consecutive quarters of growth of 1 percent and more, on the back of strong exports and the earthquake rebuild in Canterbury.
But the economy faces a NZ$5 billion ($4.05 billion) income hit because of the 50 percent fall in dairy prices from their peak in February, while the surge in construction eased to a more moderate level, and domestic activity is positive but modest.
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