New Zealand second quarter economic growth disappoints

New Zealand's farm-dependent economy is growing more slowly than expected, official figures showed Thursday, feeding expectation of further interest rate cuts.

Statistics New Zealand said the economy expanded 0.4 percent in the three months to June, below consensus forecasts of 0.6 percent.

That pushed down annual growth in Gross Domestic Production (GDP) to 2.4 percent, the lowest in two years and economists expect it to fall further.

The June quarter improved on 0.2 percent expansion for the first three months of 2015 when diary prices plunged, but still disappointed.

"The 0.4 percent rebound... from the 0.2 percent rise in the first quarter, is disappointing and supports our view that the economy is weaker than the RBNZ (Royal Bank of New Zealand) believes," said Paul Dale, chief Australia and New Zealand economist at Capital Economics.

"We remain confident in our view that interest rates will be reduced from 2.75 percent now to 2.0 percent by early next year."

New Zealand cut interest rates just last week, the third reduction in a year, with the central bank suggesting further easing was on its way with softening growth and low inflation.

"These data suggest that even our below-consensus call that GDP will rise by just two percent this year now looks a bit too optimistic," Dale said.

The New Zealand dollar lost 0.4 US cents to fall as low as 63.31 US cents on the release of the latest GDP figures.