New Zealand's economy booming as milk output rises and annual growth rate tops 5 per cent

WELLINGTON, New Zealand – New figures released Thursday indicate New Zealand’s economy is booming thanks to a big increase in milk production.

Statistics New Zealand estimated GDP grew at an annual clip of 5.6 per cent from July through September. Over the year, the economy grew by 3.5 per cent, according the statistics agency. By comparison, the economies of developed nations averaged 1.4 per cent growth over the year.

The September quarter was the strongest in nearly four years, driven by a 17 per cent increase in agricultural output as farmers recovered from a drought earlier in 2013. International dairy prices have also been robust.

New Zealand’s economy relies on dairy farming and quarterly figures can be volatile because the weather plays a role.

The latest figures follow a string of encouraging economic signals.

A survey released this week by the ANZ bank indicated that business optimism is at a 15-year high and that farming confidence is at a 19-year high. And the government is predicting it will turn around years of deficits and begin posting fiscal surpluses in the year beginning July 2014.

House prices have also been rising quickly in the South Pacific nation of 4.5 million. That has led New Zealand’s Reserve Bank to warn that the sector is becoming overheated and to impose new lending restrictions on banks.

In the latest quarter, the statistics agency reported that manufacturing was up 1.5 per cent and household spending up 0.4 per cent. Construction was down 1 per cent, with a drop in nonresidential construction outweighing a lift in home building.