News: UPDATE 1-New Zealand economy misses growth expectations on export drop

• NZ Q4 GDP +0.4 pct q/q, vs +0.7 pct in poll
• Q4 growth +2.7 pct y/y, vs forecast +3.1 pct
• Full-year 2016 growth at 3.1 pct

(Adds details from Statistics New Zealand, context)

WELLINGTON, March 16 (Reuters) - New Zealand's economy grew more slowly than expected in 2016's fourth quarter as exports dropped sharply, mostly owing to heavy spring rain cutting dairy production.

Data from Statistics New Zealand on Thursday showed gross domestic product rose 0.4 percent from the previous three months, below economists' forecast of a gain of 0.7 percent.

The Reserve Bank of New Zealand had been looking for an increase of around 1 percent from the previous quarter, so it might be disappointed by the figure.

October-December was the first period since April-June 2015 with quarterly growth of less than 0.7 percent.

On an annual basis, the fourth quarter saw growth of 2.7 percent, compared with the poll's 3.1 percent forecast.

For all of 2016, New Zealand GDP grew 3.1 percent, higher than the previous year's 2.5 percent level.

Exports were hit hard by a 7.5 percent fall in production for the country's top commodity, dairy. Manufacturing, mining and forestry exports also fell.

However a strong underlying domestic picture makes it unlikely the central bank will waver on its determination to keep rates at a record low of 1.75 percent when it meets next week.

"The areas of weaker growth in Q4 are generally the more volatile components and we believe the underlying trend remains robust, albeit slightly softer than previously thought," ASB chief economist Nick Tuffley said in a research note.

The New Zealand dollar fell 0.4 percent to $0.7002 on the news, though it soon rebounded to $0.7014. It had already jumped as much as 1.7 percent as the U.S. dollar tumbled after the Federal Reserve signaled a more gradual pace of monetary tightening this year than many in the market anticipated.

New Zealand's benchmark S&P/NZX 50 index (nz50) was up 0.4 percent.

New Zealand's economy has raced along for the past few years courtesy of an influx of migrants and tourists plus robust house building.

Statistics New Zealand also revised third-quarter growth down from 1.1 percent to 0.8 percent.