New Zealand's economy grew at a 3.3 per cent rate in the year through March, the fastest pace in eight years, supporting the central bank's view that it must press on with interest rate increases to keep inflation at bay.
The economy grew at a 1 per cent pace in the first three months of the year, from an upwardly revised 1 per cent gain in the fourth quarter, marking three quarters of growth at 1 per cent or above, Statistics NZ said. Quarterly growth was below the Reserve Bank's 1.1 per cent expectation and the 1.2 per cent expected in a Reuters poll of economists although the annual rate beat the Reuters forecast for 3.1 per cent.
New Zealand's economic expansion in the latest quarter was helped by a 12.5 per cent rise in construction, which accounted for two-thirds of GDP growth and marked its largest increase in 14 years.
Last week, the Reserve Bank hiked the official cash rate by a quarter point to 3.25 per cent and said the economy's expansion had "considerable momentum", raising its estimate for growth in the first half of the year to 4 per cent from 3.5 per cent.
"While the headline was a bit softer than we or the Reserve Bank had expected, taking revisions to previous quarters into account, today's result still suggests that the economy had developed considerable momentum at the start of the year," Westpac senior economist Michael Gordon said in a note.
