New Zealand's economy recorded steady, solid growth in the three months to March, with GDP increasing 0.8 percent on the quarter after growth of 0.7 percent in the three months to December. Growth remained weak but improved in year-over-year terms, with GDP down 0.7 percent on the year after a previous decline of 1.1 percent.

The quarter-over-quarter increase in headline GDP largely reflects strong growth in household spending, up 1.4 percent on the quarter after an increase of just 0.1 percent previously. This was offset by weaker investment spending, down 1.3 percent on the quarter after a previous increase of 0.4 percent, with government spending and exports also recording weaker growth. On a sectoral basis, stronger growth in manufacturing and mining outweighed weaker growth in services and utilities.

Officials at the Reserve Bank of New Zealand cut the official cash rate by 25 basis points from 3.50 percent to 3.25 percent at their most recent policy meeting last month. Officials have now lowered policy rates by a cumulative 225 basis points over their last six meetings after an extended period of restrictive policy settings. In the statement accompanying that decision, officials reiterated their confidence that policy easing over recent months will support a recovery in domestic growth, despite noting concerns about the impact of global trade tensions. Although officials provided little guidance about the likelihood of further easing in coming months, they consider that they are"well placed" to respond to developments as required.

The economy is expected to rise again by 0.7 percent in Q1 from Q4 after gaining by 0.7 percent on quarter in Q4. On year, forecasts look for a 0.8 percent decrease in Q1 after a decline of 1.1 percent in Q4.

GDP data are a comprehensive measure of a New Zealand's overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. GDP calculates the total market value of goods and services produced in New Zealand within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only. The New Zealand System of National Accounts (NZSNA) is a comprehensive accounting framework based on an international standard (System of National Accounts, 1993).

Gross domestic product (GDP) can be measured using three approaches, namely the production, income and expenditure approaches. The production measure of GDP is derived from firm level data and estimates the value added by all producing industries in the New Zealand economy. The income measure of GDP is derived from earnings data and estimates how the income earned from these producing industries is then distributed throughout the economy as returns to labor, capital and government. The expenditure measure of GDP is derived from data estimating spending on goods and services by final end users and includes consumption, investment and exports minus the value of imports.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.