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On Thursday, the official statistics office of New Zealand Government, Statistics New Zealand, released the country’s fourth quarter GDP growth, seeing an increase of 0.4% for the December quarter and a total annual growth of 3.1%.

Although the last quarter of the year and overall annual data saw growth in its gross domestic product and despite improved immigration rates and low borrowing costs as well as housing boost, the data still missed analysts’ expectations to reach around 0.7% growth, following the revised 0.8% growth during the September quarter of 2016.

“Growth in service industries was partly offset by weaker activity in primary industries also flowing through into manufacturing. At an industry level, growth was a mixed bag, with only half of our 16 industries rising,” said Gary Dunnet, senior manager of National Accounts at SNZ.

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The sectors of the government that saw growth mostly fall under the services industries, increasing 0.7% during the quarter. The growth in this sector was attributed to a better performance of the business services, reported with 1.7% growth, with the arts, recreation, and other services sector up by 3.8%.

Among the sectors that saw a decline to its quarterly growth is from the Agriculture department, down by 0.6%, mainly due to lower milk production. Manufacturing also fell to 1.6%, as the country saw lagging performance under forestry and mining, driving lower manufacturing activity as well as slow primary exports. Another contributor to the 1.6% decline in manufacturing came from a dismal performance under food, beverage, and tobacco manufacturing, as well as machinery, transport equipment, and equipment manufacturing.

Expenditure for the GDP grew 0.2%.Tourist spending saw a strong increase of 5.1% during the quarter, while household spending grew by 0.4% at $150 billion, which was slower compared to the two previous strong quarters, the movement strongly due to increased spending on services and durable goods. The country saw its inventories build up to $906 million from the distribution and manufacturing inventories.

New Zealand’s exports also plunged by 3.8% to $70 billion as the exports under dairy products, metal products, machinery and equipment, crude oil, timber, and logs did not see much improved numbers during the quarter. The imports for services and goods rose 1.9%, mainly from imports of machinery and plants.

The GDP per capita declined 0.2% during the December quarter, compared to the two consecutive increases from the June and September quarters both at 0.3%. According to SNZ, the country’s current economic price was equivalent to $261 billion.

NZD/USD

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Meanwhile, the country’s local currency (NZD) slightly fell against the US dollar as the lower-than-expected GDP growth disappointed some analysts and investors. The kiwi dollar is currently trading at $0.6997 against the greenback, down by 0.16% or $0.00111, at the time of writing, 0922 GMT.

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Previously, the Reserve Bank of New Zealand Governor Greame Wheeler mentioned that if the economic state of New Zealand would improve in the months to come, and meet forecasts, interest rates may be put on hold at 1.75% for the following two years. Despite the weak GDP growth for Q4 2016, New Zealand is still on track to reaching economic development for 25 consecutive quarters.

The New Zealand dollar has been in the bear market against the greenback since the last week of February due to the hawkish approach of the Fed towards a likely third rate hike.

However, for the past week, kiwi and Australian dollar were able to rally in the market for around 2% ahead of its release of the GDP data for the fourth quarter of 2016 as well as the declining hawkish approach of the Fed towards its monetary policy. Unfortunately, the lower-than-expected fourth quarter GDP data SNZ released sent the kiwi back in bear market.

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