WELLINGTON, New Zealand (AP) — New Zealand’s agriculture-driven economy is picking up steam, growing at the fastest pace in five years as the region continues to offer a bright spot in a gloomy world economy.
Statistics New Zealand said Thursday that gross domestic product grew 1.1 percent in the first three months of the year compared with the previous quarter. Agriculture was up by 2.3 percent and manufacturing by 1.8 percent. The central bank and many economists had predicted the economy to grow at about half that pace or less.
It was the country’s best quarterly economic growth in five years, although the annual growth rate was a more muted 1.7 percent, reflecting what has been a sluggish recovery. Earlier this month, Australia reported its economy grew 4.3 percent in the year to March, thanks to a mining boom. It was Australia’s best growth since the global financial crisis.
New Zealand’s numbers were helped by recent wet and mild weather, which has improved grass growth and given a boost to farmers. Economists cautioned that this and other one-off factors may have somewhat skewed the figures, but agreed there was underlying strength in the numbers.
“When you look around the world and see how many troubles are out there, to grow at all is a pretty good performance,” said Craig Ebert, a senior economist at the Bank of New Zealand. “But to grow at the numbers we’ve seen is really quite encouraging.”
Ebert said New Zealand’s recovery appears to be picking up pace, although cautioned that continuing problems in Europe and elsewhere pose a threat.
New Zealand has been helped by the economic strength in both Australia and China, its two biggest export markets.
Mark Smith, a senior economist at the ANZ bank, said the robust dairy industry helped drive the rise in manufacturing, as farmers bought more equipment. He said the economy might be further boosted this year by rebuilding work in the city of Christchurch, which is recovering from a devastating earthquake last year.
New Zealand’s dollar rose above 80 cents for the first time since early May after the figures were released. Smith said the currency’s strength is acting as a drag on both tourism and exports by making New Zealand’s goods and services relatively more expensive. A high Australian dollar has been having a similar effect there.
Ratings agencies continue to be concerned about high levels of private debt in New Zealand’s $160 billion economy. Borrowing has been fueled in part by high housing prices.
