As expected, the economy contracted 0.3% in the March quarter. The drought brought activity in the agricultural sector down after a recent strong run, the housing sector continued to slow off the back of the boom, oil prices are dragging on the economy in general, and mining was down after a surge in the December quarter from oil drilling. The slow-down in net immigration also slowed growth. It is expected that the economy will do better in the June quarter with the record dairy payout, lower business tax, and higher oil receipts coming into play. The Reserve Bank is now more likely to cut interest rates sooner.
Overall, the economy grew 3.0% last year, above the long-run average.
Naturally, National will use these figures for another hit and run attack. This time is would be nice to see them present their answers. I’m dying to know how they would beat peak-oil driven petrol prices, a drought, the credit crunch, and an international housing slow down. Don’t hold your breath though, National has nothing on the economy they haven’t asked a single question in Parliament on government fiscal policy or the economy since before the Budget, and their ‘economic policy’ fits on the back of a napkin.