Economy grows strongly as global challenges build
The economy is continuing to grow solidly with the return of tourists in increasing numbers and higher construction activity, putting New Zealand in a stronger starting point to meet the challenges of a deteriorating global economy.
GDP rose 2 percent in the September quarter following an increase of 1.9 percent in the previous June quarter, above economists’ expectations which ranged from 0.7 percent to 1.3 percent. The economy is nearly 7.9 percent bigger than before the start of the pandemic, ahead of Australia, the US, Canada, Euro area, Japan and the UK.
“The growth has been led by business investment and return of tourists, while central government spending was down 1.8 percent in the September quarter and flat in the previous June quarter. This follows the Treasury saying yesterday that the Government’s fiscal policies were reducing inflation pressures in the economy,” Grant Robertson said.
“This is another solid result and shows the strength of the economy despite a challenging global situation marked by high inflation and the effects of the Ukraine war and ongoing disruptions from the pandemic. The latest economic indicators suggest the momentum has continued into the December quarter. There are signs however that activity will slow from there.
“Government actions to grow the economy means we are in a stronger position that before the pandemic. New Zealand is as well placed as any other country to face the shifting global conditions, with low unemployment, growing exports, a rebound in tourist numbers and a healthy set of Government books. Our economic plan is working for Kiwis.
On an annual basis, economic activity was 6.4 percent higher than the same quarter in the previous year. The size of the economy was $375 billion.
“The economy’s resilience stands us in good stead in a volatile economic environment with a period of high inflation to be followed by forecasts of a shallow recession. We will continue to focus on supporting New Zealanders with cost of living pressures while carefully and responsibly managing the Government’s finances that the Treasury noted is helping reduce demand pressures,” Grant Robertson said.
“The services sector, which makes up two-thirds of the economy, rose 2 percent as more people travelled, which occurred in a period when the borders were fully opened to all visitors. The construction sector, business investment and exports of dairy and meat also grew strongly.
“Compared with New Zealand’s 6.4 percent growth, Australia rose by 5.9 percent, Canada by 3.9 percent, the Euro area by 2.3 percent, Japan by 1.7 percent, the UK by 2.4 percent and the US by 1.9 percent. The OECD grew 2.5 percent.
“Our balanced approach means we will continue to invest in the public services that New Zealanders value – hospitals, schools and houses - and build an economy for the long term that delivers higher wage jobs and low emissions that makes our businesses and families stronger in good times and bad,” Grant Robertson said.