New Zealand’s finance minister Bill English will put an extra $1 billion (AU$940 million) in the next year's budget to boost the kiwi economy. The Finance Minister’s decision has been revealed in the Treasury's latest economic update, released on Dec 15.

The update said growth rate of economy is slow at 2.1 percent and the average growth will be 2.7 percent for the next five years. Total capital spending will reach more than NZ$5 billion (AU$4.6 billion) in 2016 with more money going into construction projects, reports TVNZ.

The Greens were blaming the government for the slowing economy, and it welcomed the plan for increased capital spending. "It's the right thing to do to give the economy a push," said co-leader Metiria Turei.

Welcomes US rate hike

Meanwhile, New Zealand's finance minister said the US Federal Reserve's decision to raise interest rates is positive for his country's economy. He said it might cause the New Zealand dollar to fall over time.

“Although it's largely already been built in by the market, it's good news for our economy because it's a sign of US strength,” Bill English told Reuters.

But the bad news for New Zealand is that its dairy herd is shrinking for the first time in a decade as the fading milk boom is prompting farmers to cull cattle to settle production costs. The global dairy prices tumbled 65 percent in US dollar terms between February 2014 and August 2015 on the back of over supply, sanctions on Russian imports and fall in Chinese demand.

However, prices have picked up since the August lows though they are still not exciting, reports the Financial Times. The New Zealand dairy cattle stock slipped to 6.4 million in June. Official data said the decline of 300,000 compared to 2014 was the first annual reduction since 2005.

The figures coincided with the warning of the Reserve Bank of New Zealand that the country’s dairy farmers made heavy losses in 2014-15, and bank lending to dairy sector jumped 10 percent at NZ$40 billion (AU$37 billion). There is concern in the central bank about over exposure to the dairy sector as in the past decade farmers were leveraging China’s growing demand for milk.

According to New Zealand’s ministry for primary industries, the drop in milk production will be 7 percent in 2015-16 and claimed prices will rebound in late 2016 with an increase in demand.

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