THE TAKEAWAY: New Zealand 4Q GDP grew 0.3% vs. 0.6% forecast > Traders Surprised by Weaker than Expected Results > NZDUSD Drops
Data released by Statistics New Zealand showed that the country’s economy grew 0.3 percent in the fourth quarter of 2011, failing to meet the 0.6 percent growth rate that analysts expected. The figure was smaller than the 0.7 percent growth rate reported in the previous period. The economy maintained a 1.8 percent growth rate from the prior year and missed the forecasted rate of 2.2 percent.
Financial markets, agriculture, and consumer markets were the primary economic growth contributors, expanding 1.3 percent, 3.5 percent, and 2.2 percent, respectively. However, a 2.5 percent drawdown in the manufacturing industry weighed on the overall growth data.
Both growth figures fell significantly short of what the market expected, weighing on the probability that the Reserve Bank of New Zealand would raise interest rates in the near future. As a result, traders shifted their portfolios away from the Kiwi. After the release, the NZDUSD dropped from 0.815 to 0.810, only to slightly recover a few minutes later, hovering around 0.811.