By Ambar Warrick
Investing.com-- New Zealand’s economy grew more than expected in the second quarter, data showed on Thursday, as the country began rolling back restrictions introduced during the Omicron COVID-19 outbreak earlier in the year.
Gross Domestic Product (GDP) grew 1.7% in the June quarter from the prior one, more than expectations of 1%. At an annualized rate, GDP rose 0.4%, more than expectations of 0.2%.
The growth comes after the New Zealand economy contracted in the first quarter, marred by an outbreak of the Omicron variant of COVID-19. Rising commodity prices had also buffeted the economy.
A second consecutive quarter of contraction would have put New Zealand in a technical recession.
Transportation services were the biggest upward drivers to the economy in the second quarter, Statistics New Zealand said in a release, as the relaxing of COVID curbs spurred a recovery in travel.
Consumers also took to spending more on retail and recreational activities, which boosted economic growth.
Still, New Zealand is contending with inflation reaching near 30-year highs in the wake of the COVID-19 pandemic. This has spurred a series of interest rate hikes by the central bank.
The Reserve Bank of New Zealand was among the first central banks in the world to begin tightening policy last year, in order to fend off an expected rise in price pressures.
The New Zealand dollar rose 0.3% after the GDP reading, given that strength in the economy gives the central bank more space to keep raising interest rates.
The bank hiked its benchmark rate by 50 basis points in August to a seven-year high and vowed to keep tightening policy in the near-term.
New Zealand’s oceanic neighbor Australia also logged a steady economic recovery in the second quarter, after relaxing COVID-linked curbs earlier this year. But both countries still face high inflation levels due to rising food and fuel prices.