New Zealand economy slows to more than five-year low

Economic growth in New Zealand grew at its slowest rate in five-and-a-half-years in the second quarter, as the country deals with lacklustre growth conditions amid a broader global economic growth slowdown plagued by geopolitical issues.

For the second quarter, the New Zealand economy grew by 0.5% due to weaker mining and manufacturing activity, while annual growth to was at 2.1%, the lowest reading since the fourth quarter of 2013.

Economists in a Reuters survey had expected for a 2% annual growth. The quarterly results were in line with the Reserve Bank of New Zealand’s forecast for the country’s gross domestic product numbers.

Experts predict that an interest rate cut is likely to unfold going forward and would most likely take place in November.

Last month, the Reserve Bank of New Zealand cut its base rate 0.5 percentage points to a record low of 1.0%, in a move to prop up the economy to meet inflation targets and boost employment numbers.

Internally, the country faces domestic pressures with falling house prices and a downbeat business sentiment. To add to that, the trade-dependent economy is facing headwinds externally due to a slowdown in China – its biggest export partner – and the United States-China trade war.

The New Zealand dollar dipped 0.3% against the greenback moments after the release of the economic data.