NZ economy expands at end of 2010 to miss recession

New Zealand's economy grew slightly in the last three months of the year, managing to avoid a recession.

Gross domestic product expanded 0.2% in the three months to the end of December, according to Statistics New Zealand. The economy had contracted by 0.2% in the previous three months.

That pushed the annual rate of growth to 1.5%.

The figures show the state of the economy before the country was hit by a severe earthquake last month.

"The focus now is on how quickly economic activity rebounds," said Philip Borkin from Goldman Sachs.

'Poor news'

Analysts have said that economic growth was set to slow in coming months.

On 22 February an earthquake hit Christchurch, the second in the region in five months.

More than 180 people were left dead as it caused widespread damage to homes and infrastructure

At its latest meeting earlier this month, New Zealand's central bank cut interest rates to 2.5% in an effort to stoke growth.

"The actions of the Reserve Bank have been in anticipation of further poor news," said Robin Clements of UBS.

'Mixed picture'

The latest figures reflect the state of New Zealand's economy between October and December, before the earthquake struck.

According to the statistical office, manufacturing rose by 2.5% helped by an increase in metal production, and machinery and equipment.

At the same time real estate and business services, and forestry and logging all gained.

"The small increase in gross domestic product this quarter is the result of a mixed picture across industries," Rachael Milicich of Statistics New Zealand said.

"A rebound in manufacturing activity this quarter has been mostly offset by falls in other parts of the economy."

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