* NZ Q1 GDP rose 1.6%, beats all estimates
* Annual GDP up 2.4%, well ahead of forecasts
* Economists pencil in earlier rate hikes
(Adds details, economist comments)
By Praveen Menon
WELLINGTON, June 17 (Reuters) - New Zealand's economic
growth swept past forecasts in the first quarter on the back of
a housing boom and strong retail spending, avoiding a second
recession and bringing forward expectations for tighter monetary
policy.
Gross domestic product (GDP) rose 1.6% in the three months
through to March, Statistics New Zealand said on Thursday, well
ahead of a Reuters poll forecast of 0.5% growth and the Reserve
Bank of New Zealand's (RBNZ) estimate of a 0.6% fall.
New Zealand's success in virtually eliminating the
coronavirus in the country allowed it to reopen its domestic
economy must before other advanced nations, boosting employment
and consumer spending.
Westpac Bank said economic growth was estimated to be
running at about 0.8% above levels prior to the global
coronavirus outbreak.
The rapid recovery follows better than expected readings on
key indicators like employment and retail spending in recent
months that prompted the central bank to signal a move away from
stimulatory monetary policy settings adopted during the COVID-19
pandemic, one of the first in the world to do so.
ANZ Bank said it was bringing forward its forecast for the
central bank to hike its official cash rate to February 2022,
saying "a year from now feels too far away".
"Q1 data confirm NZ's economic recovery has been spectacular
relative to early-pandemic expectations. And while there are
still pockets of weakness, they are getting hard to identify at
the aggregate level," said ANZ Chief Economist Sharon Zollner.
The better than expected GDP figures pushed the Kiwi dollar
up 0.3% to around $0.7073.
Growth was largely driven by a surging housing sector amid
historically low interest rates and cheap mortgages, although
worries about housing affordability have led the government and
RBNZ to introduce measures to try to cool the market.
Finance Minister Grant Robertson said in a statement that
confidence in the recovery also led to a boost in retail
spending, dining out and holiday accommodation, offsetting the
loss of overseas tourism, but he warned there were still
uncertainties.
New Zealand's vaccine rollout has been slower than other
nations, and the country's border are expected to remain closed
until 2022.
The GDP bounce comes after New Zealand reported a 1.0% fall
in economic growth in the final quarter of 2020.
The country had rebounded from recession with a revised
14.1% quarter-on-quarter GDP growth in the three months to
end-September last year. That more than reversed an 11% drop in
the preceding quarter as the country observed strict lockdown
measures.
Annual GDP rose 2.4% in the first quarter, Statistics New
Zealand said, compared with analyst expectations for a 0.9%
rise.
(Reporting by Praveen Menon; Editing by Richard Pullin)
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