Rapid cuts to the interest-driving official cash rate (OCR) are now expected by economists and analysts, following a poor showing in quarterly gross domestic product (GDP) data yesterday.
Quarterly GDP growth came in surprisingly weak at 0.2%, but annual growth remains in a strong position at 3.2%, according to the Statistics New Zealand (SNZ) data.
However, the sign of weakness has analysts and economists sharpening their pencils in expectation of more, or quicker, cuts to the OCR by the Reserve Bank in coming months.
The market was surprised last week when the OCR was cut by 25 basis points to 3.25%.
The Reserve Bank, markets and Westpac had all expected quarterly growth to come in at 0.6%.
Dragging down the quarterly result were the combined primary industries, agriculture, forestry, and mining.
It was the largest decline in almost five years.
Finance Minister Bill English headlined the ''continued economic growth'', while Labour finance spokesman Grant Robertson highlighted the 0.2% was less than half the 0.6% forecast.
SNZ national accounts manager Gary Dunnet said oil and gas were big factors in the lower quarterly GDP growth, with less extraction and exploration, as international prices fell.
Agriculture declined 2.3% in the quarter to March.
Lower milk production was behind the decrease, in a quarter which included drought conditions and lower dairy prices.
Forestry production and exports of forestry products were also down, Mr Dunnet said.
On the growth at just 0.2%, Westpac economist Dominick Stephens said yesterday it ''sealed the case'' for an OCR cut in July, as did ASB's senior economist Jane Turner, while the ANZ predicted not only a July cut, but a third cut ''later in the year'', citing ''sluggish'' growth momentum.
Ms Turner said: ''We can no longer see why the Reserve Bank will wait until September given its genuine concerns for demand [and] given its weaker national income outlook due to the lower terms of trade,'' she said in a statement yesterday.
Mr English said the Government's ''sensible economic programme'' was taking New Zealand in the right direction.
''A reduction in dairy production contributed to quarterly growth of 0.2% coming in at the lower end of market expectations, but still resulted in annual growth of [seasonally adjusted] 2.6%,'' he said.
He said it was solid, sustainable economic growth which was giving businesses around the country the confidence to invest and hire, providing families with new jobs, higher incomes and opportunities to get ahead.
Mr English said 74,000 jobs had been created in the past year and average annual wages had increased by $5700 in the past four years.
''Treasury forecasts they will rise by a further $7000 to around $63,000 by mid-2019, considerably faster than inflation,'' Mr English said.
Labour's finance spokesman, Grant Robertson, said the weak growth figures were a signal of ''rough weather ahead''.
He said Prime Minister John Key and Mr English had ''made a losing bet'' that dairy prices would remain strong and they would not have to invest in other areas of the economy.
''The Government squandered the opportunities they had in the good times to invest in diversifying the economy, boost research and development, and revitalise the regions.
''It is worrying that we now face so much government debt with not a surplus in sight, high unemployment and we are staring at weaker growth ahead,'' Mr Robertson said in a statement yesterday.
