New Zealand economy cools

New Zealand's economy grew at a slower pace in the first three months of the year amid a fall in construction activity, official data released Thursday showed, with economists tipping no near-term interest rate hikes.

The January-March quarter growth of 0.5 percent took the annual rate of expansion to 2.7 percent, and was broadly in line with analysts' forecasts.

It followed a 0.6 percent expansion in the September-December period.

Statistics New Zealand said construction had cooled off, falling 1.0 percent for the quarter, but still up 1.4 percent for the year.

The 0.6 percent growth in service industries helped offset the decline, the statistics body said.

Capital Economics' chief Australia and New Zealand economist Paul Dales said the weaker housing market was being reflected in the construction output.

"GDP growth is by no means falling off a cliff, but the end of the migration and housing booms have already caused a marked slowdown and they probably mean growth will ease to just 2.0 percent next year," he said in a note.

“Against that backdrop, the RBNZ (Reserve Bank of New Zealand) is unlikely to raise interest rates until 2020."