19 Dec 2013

Rebound from drought boosts economy

8:46 pm on 19 December 2013

The swift recovery in the farming sector from drought has boosted economic activity to its fastest pace in nearly four years.

Official figures show gross domestic product - a broad measure of the health of the economy - jumped 1.4% in the three months to September, compared with the previous period.

Statistics New Zealand said better growing conditions since June had led economists to expect a solid rebound in agricultural production following the drought - and that proved to be the case with the biggest increase in 25 years.

Manufacturing benefited from higher diary and meat production, snapping two quarters of contraction, while the rebuilding of earthquake-hit Canterbury also boosted the sector.

Consumption rose, led by spending on cars and furniture, while investment in plant and machinery is now at its highest level since the series began in 1987. However, exports and construction activity declined.

Compared with a year earlier, the economy expanded 3.5% - the most in six years.

Statistics New Zealand also revised the June quarter growth up to 0.3% from the previously published figure of 0.2%.

Economists predict robust growth of more than 3% in 2014, triggering interest rates rises from March.