Recovery on track, long-term focus remains

  • Bill English

New Zealand’s economic recovery remains on track, despite figures today showing a small contraction in gross domestic product in the September quarter, Finance Minister Bill English says.

“Before this result, we had seen five consecutive quarters of growth since coming out of a deep recession. I’ve said all along that this recovery would be a bit bumpy at times, and that’s proved to be the case.

“We’ve also stressed that building faster ongoing growth will take some time. New Zealand’s economic imbalances have built up over more than a decade – exacerbated by the global recession – and so it will take us more than a year or two to fix them.”

The one-off effects of the Canterbury earthquake and snow storms in Southland also showed through in the September quarter, Mr English says.

“Having said that, I’m actually quite confident that the economy will build momentum in 2011 and beyond.

“Unemployment has peaked and is coming down – although not as fast as we would like. However, we are enjoying strong export prices and we’re hosting the Rugby World Cup next year, which will be good for the economy.

“It’s important that we look through the quarter to quarter figures and focus on our long-term challenge, which is building a sustainable recovery built on savings and exports rather than borrowing and consumption.

“On that score, we have seen some encouraging signs in recent months. If anything, the figures today reinforce the need for us to press on with our programme to build faster growth around the earnings sign of the economy. That will be the Government’s firm focus over the next few years.”

Statistics New Zealand confirmed today that GDP fell 0.2 per cent in the September quarter – the first quarterly fall since March 2009. This left the annual increase in GDP at 1.4 per cent for the year to September.