New Zealand GDP surprises to the downside, shallow recovery to -0.1% from -0.3%

New Zealand's Gross Domestic Product (GDP) contracted another -0.1% in the fourth quarter, recovering from the previous quarter's -0.3% but missing the median market forecast of an increase of 0.1%. 

Annualized YoY GDP in Q4 also missed the mark, coming in at -0.3%. Annualized quarterly GDP bounced from the previous print of -0.6%, but failed to hit the market's forecast 0.1%.

According to national accounts industry and production senior manager Ruvani Ratnayake, "Wholesale trade was the largest downwards driver this quarter, led by falls in grocery and liquor wholesaling; and machinery and equipment wholesaling."

Ruvani Ratnayake continued, "Increased activity associated with the NZ General Election contributed to growth in public administration, safety, and defence."

Market reaction

The NZD/USD pair saw a quick drop when the GDP print missed the mark, declining into 0.6055 in early Thursday trading. The pair initially rallied on Wednesday after the Fed held rates but tilted its head at future rate cuts, driving Kiwi to an intraday high of 0.6085.

About New Zealand's quarterly GDP

The Gross Domestic Product (GDP), released by Statistics New Zealand, highlights the overall economic performance on a quarterly basis. The gauge has a significant influence on the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, in turn affecting the New Zealand dollar. A rise in the GDP rate signifies improvement in the economic conditions, which calls for tighter monetary policy, while a drop suggests deterioration in the activity. An above-forecast GDP reading is seen as NZD bullish.