Recession ends; RBNZ to shift to neutral stance

New Zealand's prolonged recession has met an end; RBNZ to shift to neutral stance in early 2010

First positive GDP print since end-2007

Inventories posted record fall in 2Q

RBNZ to shift to neutral policy stance in early 2010

The New Zealand economy expanded for the first time since the end of 2007 in the June quarter, marking the end of a prolonged recession. The economy expanded 0.1%q/q in 2Q (J.P. Morgan +0.3%, consensus -0.2%), after contracting a revised 0.8% in the March quarter (previously -1.0%).

Second quarter GDP growth would have been much stronger had inventories not fallen so sharply. The run down of inventories over the June quarter subtracted 2.3%-points from GDP growth. The other GDP components were, however, much in line with our expectations. Business investment was slightly firmer, but private consumption and net exports added to growth as expected.

NZ Recession - Full Document (pdf)

ENDS

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