News: PREVIEW- NZ 2Q GDP tipped to grow 1.1 percent on quarter

• Data due at 2245 GMT Wednesday (Thursday 1045 NZ time)

New Zealand's economy is set to continue outperforming its peers, with solid construction, manufacturing, retail and export activity tipped to boost second quarter growth.

Economists polled by Reuters expect the economy to expand 3.7 percent on the year in the second quarter while quarter-on-quarter growth is expected to be 1.1 percent, the fastest quarterly expansion in more than two years.

"Economic momentum has well and truly shrugged off the malaise seen back in first-half 2015," said ASB Senior Economist Jane Turner.

The economy grew 0.7 percent on quarter in the March quarter and 2.8 percent on the year.

Westpac Bank Acting Chief Economist Michael Gordon said construction, forecast to rise 4.1 percent on quarter, is tipped to make the biggest contribution to the quarterly growth in the June quarter.

However, "the agricultural sector looks to have put in a better showing this quarter, as milk and meat production rebounded after a poor start to the year," he said.

The price of whole milk powder – the main staple in New Zealand’s dairy export basket - recently reached their highest in 12 months as a global supply glut showed sign of easing

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	Gordon also noted "signs are positive on the consumer front" 

with retail sales recording the fastest quarterly growth since 2006.

ANZ Bank Senior Economist Philip Borkin said the solid GDP would keep the New Zealand dollar well supported. The so-called kiwi has gained more 6 percent against the greenback so far this year.

"The strong domestic economy is clearly a driving force behind NZD strength, particularly against a 'muddle through' global backdrop," said Borkin.

Economists said, however, the strong GDP was unlikely to have much impact on the central bank's interest rate strategy, in particular given the high New Zealand dollar and tepid inflation.

The central bank cut rates by 25 basis points to a record low 2.0 percent in August to stave off deflation and restrain the rising currency . It said further policy easing was likely.

Consumer price inflation is running at 0.4 percent, well below the central bank's target range of 1 percent to 3 percent.

"The recent lift in the NZD creates a further headwind for the RBNZ's projected recovery in inflation," said ASB's Turner.

She continues to expect a rate cut in November to 1.75 percent and said there is growing risk of another next year.