Following the GDP report of Statistics New Zealand, anticipate the Kiwi to appreciate against the US dollar in the near term period. According to the government released data, New Zealand’s gross domestic product expanded at a 0.2 percent rate in the three months leading to December 31,2010 while growing at an annualized rate of 1.5 percent, amidst concerns of a possible technical recession. The economy shrank 0.2 percent in the third quarter of 2010.
The economic expansion was driven mainly by the manufacturing industry, which expanded by 2.5 percent, due to the increased demand in metal products and machinery. Growth in the industry was helped in part by rising costs of raw materials caused by the booming commodity market. Following behind is the construction industry as activity improved by 1.5 percent when commercial buildings rose and rebuilding efforts from last year’s 7.3 magnitude earthquake began. Exports also rose by 2.1 percent while investments climbed 4.8 percent last quarter.
The growth in New Zealand’s economy has improved outlook throughout 2011 on a nation struggling with waning consumer confidence following February 22’s devastating earthquake in Christchurch. Economic pickup is still expected to be slow for the first half of the year though, but it is anticipated to accelerate coming into 2012. Expect the improved optimism from the GDP expansion to push the Kiwi into a rally against the Greenback today.
