Cautious confidence heading into Christmas

  • Bill English

New Zealanders can go into the Christmas break feeling more positive after two quarters of economic growth, but more work is needed to ensure a strong sustainable recovery, Finance Minister Bill English says.

GDP data shows the economy grew 0.2 per cent in the September quarter and June quarter growth was revised upwards from 0.1 to 0.2 per cent. In the September quarter household consumption and mining were stronger than expected and manufacturing and construction down.

For the year to September 2009, the economy contracted 2.2 per cent compared with the year to September 2008.

"While growth is still weak, today's figures are positive news. New Zealanders can go into the Christmas break feeling a bit more confident about the economy and the year ahead," Mr English says.

"Two quarters of growth - following five quarters of contraction - reflects a stabilisation in the global economy and the Government's sound economic management.

"The positive data follows Treasury's updated forecasts which show unemployment is likely to peak sooner and at a lower level than previously thought, with 64,000 fewer jobs expected to drop out of the economy.

"However the recovery remains fragile and any further problems abroad could weaken our growth prospects. That is why it is critical we improve the competitiveness of our exporters and address structural imbalances in our economy.

"To climb back up the world income ladder and to replace jobs lost during the recession we need businesses to have the confidence to invest and create jobs. The Government's role is to make that as easy for them as possible.

"We have set out a comprehensive programme to lift our economic performance and we will be developing that further in 2010," Mr English says.