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POLL-NZ economic growth seen steady in March quarter as headwinds mount

Credit: REUTERS/THOMAS WHITE

New Zealand's gross domestic product is expected to have grown 0.6% quarter-on-quarter in the three months to March, the same as the previous quarter, as higher global dairy prices bolstered growth in an economy that otherwise has begun to flag.

* https://apac1.apps.cp.thomsonreuters.com/Apps/econ-polls?RIC=NZGDPQ%3DECI quarter-on-quarter poll data

* https://apac1.apps.cp.thomsonreuters.com/Apps/econ-polls?RIC=NZGDPA%3DECI year-on-year poll data

* Data due 2245 GMT Wednesday (1045 NZT Thursday)

WELLINGTON, June 18 (Reuters) - New Zealand's gross domestic product is expected to have grown 0.6% quarter-on-quarter in the three months to March, the same as the previous quarter, as higher global dairy prices bolstered growth in an economy that otherwise has begun to flag.

The median forecast from ten economists polled by Reuters put annual growth at 2.4% in the March quarter, slightly up on the 2.3 % posted in the December quarter.

"Some of the wind came out of the economy's sails in late 2018, and it looks like the pace of economic growth has remained subdued through the first half of this year," said Westpac economists in a research note, adding that manufacturing and services industries had slowed markedly even as global agricultural prices rallied and supported the economy.

The GDP data is set to be released by Statistics New Zealand on Thursday at 10.45 a.m. (2245 GMT on Wednesday).

On Wednesday, New Zealand will post current account data for the March quarter. The median forecast from seven economists showed the annual current account deficit shrinking slightly to 10.367 billion from 10.974 billion the previous quarter.

If the GDP numbers do show 0.6% quarterly growth for the March quarter, as forecast by the Reuters survey, it would beat the 0.4% growth forecast by the Reserve Bank of New Zealand (RBNZ) in May.

The RBNZ is set to announce its next monetary policy decision on June 26 after cutting rates for the first time in more than two years to a record low of 1.5% in May.

Though the bank was seen as likely to keep rates on hold at the next meeting, some economists thought the soft growth outlook would prompt the bank to cut later in the year.

"We think the economy will need a little additional monetary stimulus to see a lift in growth sufficient to deliver inflation sustainability at target," said ANZ chief economist Sharon Zollner in a research note.

Slowing house price and population growth were a headwind to GDP, though strong global prices for commodities particularly New Zealand's top goods export, dairy, were providing support.

But economists expected annual growth to slow further as domestic consumption eased and global trade tensions hit confidence with Kiwibank forecasting growth to fall to close to 2% in the quarter ending June.

The Treasury department downgraded its gross domestic product forecasts to 2.1% in the year ending June 30, 2019, compared to 2.9% predicted in December, hurt by a cooling global economy and slowing domestic consumption. The Treasury forecasted GDP growth of 3.2% in fiscal 2020.

(Reporting by Charlotte Greenfield; Editing by Simon Cameron-Moore) ((charlotte.greenfield@thomsonreuters.com; +64212437821; Reuters Messaging: charlotte.greenfield.thomsonreuters.com@reuters.net)) Keywords: NEWZEALAND ECONOMY/GDP (POLL)

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