New Zealand's economy has contracted more than expected in the second quarter as construction remains in decline and global uncertainty weighs, increasing expectations of a steeper rate cut in October.

Official data out on Thursday shows gross domestic product (GDP) fell 0.9 per cent in the second quarter from the prior quarter, worse than analysts' and the Reserve Bank of New Zealand's forecasts of a 0.3 per cent fall.

New Zealand's economy has contracted in three of the last five quarters.

Annual GDP decreased 0.6 per cent, Statistics New Zealand data showed. The market had expected it to remain unchanged.

Following the weaker-than-expected data, two-year swap rates slid 10 basis points to 2.7290 per cent, their lowest since early 2022. The kiwi dollar fell 0.5 per cent to $0.5932, w

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