New Zealand's economy contracted at the fastest pace in 16 years in the fourth quarter of 2008, but the shrinkage was not as bad as many economists expected.

Statistics NZ reported Friday that the nation's Gross Domestic Product contracted 0.9 percent in the December quarter, the steepest drop since 1992.

The contraction was still slightly better than the 1.0 percent decline predicted by a majority of economic analysts.

The data confirmed that New Zealand's economic activity shrank in each of the 2008 quarters. For the full year to the December quarter, GDP was up 0.2 percent, meaning the 2008 contraction was slightly slower than that of 2007.

Primary industry activity increased 1.6 percent in the December quarter, while goods producing industry activity was down 3.6 percent, according to Statistics NZ.

GDP was 1.9 percent lower that it was in Q4 of 2007.

Statistics NZ said lower activity in the manufacturing and wholesale trade industries led the Q4 contraction, with manufacturing down 3.8 percent and whole sale trade value down 4.9 percent.

The agency also said the expenditure measure of GDP was down 0.6 percent in Q4.

Household consumption expenditures was flat, while consumer spending on both durable goods and non-durables were both lower

In another report confirming the slowdown in New Zealand's economic activity, Statistics NZ also reported Friday that that merchandise exports declined in overall value by 6.6 percent or NZ$243 million compared to the month before. It was the first decline in exports in six months. The drop was led by lower exports of milk-related products due to price decreases for whole milk powder.

The value of merchandise imports declined 14.2 percent or NZ$490 million, the largest drop in 16 years.

Statistics NZ said the decline in imports was led by a 70.1 percent (NZ$265 million) decline in crude oil imports.

The monthly trade balance for February was NZ$489 million, equivalent to 14.2 percent of exports, the highest percentage for a February month since 2001.

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