• Winston Peters
Deputy Prime Minister

Today's March quarter GDP result reflects the downturn in Asia and agricultural decisions resulting from the drought in parts of New Zealand, Deputy Prime Minister and Treasurer Winston Peters said today.

"At least 40% of the decline in this quarter can be attributed to agriculture. The impact of the drought has been concentrated particularly into the March quarter," said Mr Peters.

"In the short term, the downturn in many of our Asian trading partners and the resulting financial market volatility would continue to affect New Zealand.

'The economy is beginning to respond constructively to these pressures. With the fall in the exchange rate and the consequent boost in New Zealand's competitiveness, exporters are beginning to shift their focus to markets outside Asia," said Mr Peters..

Exports into the US were up by 17.5% over the three months to May, for instance, and into Europe by more than 10%.

"Looking to the second half of this year, the lower exchange rate, tax reductions to take effect from next week, and the impact of the AMP demutualisation, will combine to support economic activity."

Mr Peters said the Government would play its part to strengthen growth by implementing the extensive programme of microeconomic reform announced in this year's Budget.

"We will continue to actively monitor the economic situation and look at further ways to enhance growth. In addition, as announced in the Budget, the Government will act further, if necessary, to protect the fiscal surplus."