Drought slows New Zealand economic growth in Q1

New Zealand's economy grew by 0. 3 percent in the March quarter, with the nationwide summer drought offsetting the effects of the reconstruction of the earthquake- battered Canterbury region, the government statistics agency reported Thursday. The "modest growth" in GDP followed a rise of 1.5 percent in the December 2012 quarter, said a statement from Statistics New Zealand. "The Canterbury rebuild boosted activity for construction and related services," GDP project manager Jason Attewell said in the statement. "The rest of the economy was a mixed bag, but we are coming off very strong growth in the previous quarter." A 5.5-percent growth in construction activity, driven by the Canterbury rebuild, led the growth, followed by a 3.9-percent rise in business services activity, also driven by Canterbury and the demand for architectural and engineering services. However, the country's pillar agriculture sector saw a drop of 4.7 percent as a result of the drought, while information media and telecommunications activity was down 3.1 percent. "We expect the drought will impact on the economy for several quarters, as lower herd numbers and conception rates will affect future production," Attewell said. Economic activity for the year to the end of March was up 2.5 percent. Associate Minister of Finance Jonathan Coleman said the figures showed the New Zealand economy was performing favorably against most developed countries. New Zealand's annual growth compared with 2.5 percent in Australia, 1.8 percent in the U.S., 1.4 percent in Canada, 0.2 percent in Japan, 0.6 percent in the UK and minus 1.1 percent in the eurozone. "The nationwide drought had a significant effect on growth, with agriculture, forestry and fishing reducing GDP by 0.3 percent in the quarter," Coleman said in a statement. "However, indications are that momentum will continue this year driven by rising consumer and business confidence, and a lift in construction. The increase in household spending signals that people are feeling more secure and optimistic."