2008.12.2220:13:00UTC+00New Zealand Recession Deepens In Q3

New Zealand's recession deepened in the third quarter of 2008, as the economy posted its third straight quarter of contraction.

Statistics New Zealand reported Tuesday that the Gross Domestic Product decreased by 0.4 percent for the three months to September.

GDP had decreased 0.2 percent in the June quarter and 0.3 percent in the March quarter.

The Q3 decline was by less than the 0.5 percent fall predicted by most economic analysts, but is also expected to signal another interest rate reduction by the Reserve Bank of NZ. The current benchmark interest rate is 5.0 percent, with many economists forecasting a reduction to 4.5 percent when the RBNZ's Monetary Policy Committee next meets on January 29..

The most commonly used definition of a recession is two consecutive quarters of GDP contraction.

On an annualized basis, Statistics NZ said GDP posted a gain of 1.7 percent through September. Primary industries production increased 2.1 percent in the September quarter, Statistics NZ said, mainly due to a 6.0 percent increase in the agriculture category. Dairy products and cattle processed for meat were the main drivers in agriculture.

The agency said goods-producing industries declined 1.4 percent on quarter and service industries were down 0.2 percent. The services sector decline was the second straight, the first time the services category posted back-to-back quarterly falls since 1991.

The overall expenditure measure of GDP was down 0.7 percent on quarter, while household consumption declined 0.2 percent.

Fixed capital investment was down 8.6 percent on quarter.

Goods exports decreased 2.6 percent in the September 2008 quarter, with exports of agriculture and fishing primary products and dairy goods posting the largest falls. Imports were down 6.6 percent, with machinery and plant the category showing the biggest decline.

Statistics NZ also reported that real gross national disposable income for the year to September 2008 increased by 4.4 percent.

Overall business investment decreased 8.6 per cent in the September quarter, Statistics NZ said.

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