18 Jun 2012

Europe crisis makes NZ growth figures 'ancient history'

7:32 am on 18 June 2012

The euro zone debt crisis is expected to cast a shadow over New Zealand's subdued economic recovery.

Economists expect Gross Domestic Product (GDP) figures for the three months to March, due out on Thursday, will show quarterly growth of 0.6%, a Reuters poll says.

The poll has economists predicting annual growth of 1.4%, with stronger food production offsetting declines in construction and retail activity.

Westpac senior economist Michael Gordon says a quarterly rate of 0.6% would be the strongest since September 2010.

However, the numbers have "almost become ancient history" because of the fast-moving euro zone crisis.

Declining commodity prices - affected strongly by global and particulary Asian growth - is weighing on New Zealand's economy, Mr Gordon says. Europe is a big funder of the Asian region and a significant source of demand.

"We think (export prices) are probably about half way through their decline, and maybe will hit bottom nearer the end of this year," he says.