Strong export boost as NZ economy turns corner

An export boost is supporting New Zealand’s economy to grow, adding to signs that the economy has turned a corner and is on a stronger footing as we rebuild from Cyclone Gabrielle and lock in the benefits of multiple new trade deals, Finance Minister Grant Robertson says.

“The economy is continuing to show its durability in an uncertain global environment, with the current account deficit narrowing further thanks to stronger exports of kiwifruit and dairy products and the return of overseas visitors adding to export receipts,” Grant Robertson said.

The current account deficit, which is a broad measure of what the country earns and spends internationally, narrowed to 7.5 percent of GDP in the June year compared with 8.2 percent of GDP in March.

“This is a positive result and is better than the 8.1 percent of GDP that Treasury had forecast in the Pre-election Fiscal and Economic Update,” Grant Robertson said.

“The economy has turned a corner and the narrowing deficit helps protect New Zealand in what is a deteriorating global economy.

“The improvement was due to a goods exports surplus of $442 million in the June quarter, driven by increases in kiwifruit and dairy products. The return of greater numbers of overseas visitors is also boosting incomes in the tourism, accommodation, and hospitality sectors.

“New Zealand’s net international liability position stood at 47.8 percent of GDP in June, which was below the 49.9 percent of GDP forecast in PREFU. The current Government inherited net international liabilities above 50 percent of GDP in 2017. To get through the pandemic with our net international liabilities remaining lower than ‘the rockstar years’ shows strong economic and fiscal management through tough times.

“We know recent years have been tough for many working New Zealanders. But as the economy hits a turning point, the outlook is positive. The Treasury is forecasting average annual growth of 2.6 percent over the next four years, 100,000-plus extra jobs, and wages to outpace inflation, taking pressure off the cost of living for households.

“We are continuing to invest in an export led economy that delivers higher wage jobs. Free trade agreements now cover almost three quarters of New Zealand’s exports, up from less than half six years ago – we are seeing the benefits of these deals flow through.”