WELLINGTON (Reuters) - New Zealand was expected to post improved economic growth in its second-quarter GDP report on Thursday, just days before voting starts in a hotly contested general election in which the economy has been a dominant issue.
Ten economists polled by Reuters expected quarterly gross domestic product growth of 0.8 percent on average in the three months to the end of June, up from a tepid 0.5 percent in the previous quarter.
The ruling National Party has been trumpeting its management of New Zealand's economy, which has been the envy of the developed world in recent years, but encountered headwinds towards the end of 2016.
The 0.8 percent estimate would slightly undershoot the 0.9 percent the Reserve Bank of New Zealand (RBNZ) forecast in August.
The economists polled by Reuters predicted annual growth of 2.5 percent, unchanged from the previous quarter.
"This week's Q2 GDP data will likely show that while the economy performed better than over the prior six months, it is still ho-hum," ANZ economists said in a research note.
Nonetheless, such a result was unlikely to divert the RBNZ from its firm path of keeping rates on hold at record lows of 1.75 percent for years to stoke inflation.
The GDP outcome will, however, be seized upon by political parties as polls show the two main parties neck-and-neck before the Sept. 23 vote.
"Thursday's June quarter GDP report will have more eyes on it than usual, given it comes out two days before New Zealand’s down-to-the wire General Election," said BNZ economist Craig Ebert.
The National Party has accused the centre-left Labour Party of stalling growth by trying to renegotiate New Zealand's trade pacts and slash migration.
Labour, meanwhile, has claimed the country's headline economic figures cover up the growing inequality in the small Pacific nation.
New Zealand's growth was amongst the fastest in the developed world in recent years, underpinned by a flood of tourists, strong net migration and a building boom.
But cracks are now showing, with the construction sector dragging on growth as firms struggle to find enough labour and to cope with spiralling costs.
Growth slowed markedly to an annual 2.5 percent late in 2016 from above 3 percent where it had been for much of the year.
More recently there were some bright spots in the second quarter with a rise in production of dairy - the country's top goods export earner - and a jump in retail spending as high-profile international sporting events attracted a flood of tourists.
"Assuming...construction activity perks-up post-election, we see the NZ economy posting respectable rates of growth over the coming six months," said Zoe Wallis, chief economist at Kiwibank.
(Reporting by Charlotte Greenfield; Editing by Eric Meijer)
