NZ economy declines: GDP update shows 0.2% fall
Thursday, 19 September 2024
New Zealand’s GDP has fallen by 0.2% in the three months to June.
This comes after a slight increase of 0.1% in the three months to March.
Government and Opposition MPs traded barbs over the fall in economic activity.
New Zealand economic activity has fallen, according to newly released figures by Stats NZ, showing Gross Domestic Product (GDP) fell by 0.2% in the three months to June.
It is the third time GDP, which offers a snapshot of the performance of the economy, has declined in New Zealand since the March quarter last year.
The latest GDP update comes after a slight increase of 0.1% in the three months to March, a flat rate of 0.0% in the December 2023 quarter, a decline of 0.4% in the September 2023 quarter, a rise of 0.8% in the June 2023 quarter, and a drop of 0.5% in the March 2023 quarter.
The data showed that while New Zealand’s economic activity has declined, other countries, such as Australia, have grown.
Australia recorded a 0.2% increase in June quarter GDP, while Canada reported a 0.5% rise, the UK a 0.6% rise, and the United States a 0.7% rise.
The update also showed that sectors including retail trade and accommodation, agriculture, forestry, and fishing, all declined in the latest quarter.
“Activity in retail trade and wholesale trade has been in steady decline since 2022,” Stats NZ’s national accounts industry and production senior manager, Ruvani Ratnayake, said.
Despite the overall fall in GDP, the data showed seven out of 16 industries saw a rise in economic activity, with the largest rise in manufacturing.
“A rise in transport equipment, machinery, and equipment manufacturing drove the increase in manufacturing,” Ratnayake said. “This was the largest rise in manufacturing activity since the December 2021 quarter.”
Household spending increased by 0.4% in the June quarter, driven by a rise in spending on fruit and vegetables, and services, the figures showed. Spending on items such as new motor vehicles and mobile phones declined.
The size of the economy was $415 billion for the year ended June.
Reaction to the numbers has been mixed, with some finding fault with the Government’s handling of the economy, and others blaming the Reserve Bank.
CTU Economist Craig Renney said “the fact that we are back again in economic decline should be of real concern to those in charge of the economy, and should cause a rethink”.
He added, “there are things the Government could be doing to make sure that the economy returns to growth, and that the recovery benefits all New Zealanders”.
Meanwhile, the Taxpayers Union said the Reserve Bank had helped engineer New Zealand into a recession.
In a statement, the lobby group said “this Reserve Bank engineered recession is serious and damaging, as much recent data indicates. Although there is some slight evidence of growing confidence, that has yet to be translated into increased investment and output in the face of continued weak consumer demand and high interest rates.”
Labour took aim at the coalition Government, saying their decisions had hindered not helped the economy.
“The data confirms the New Zealand economy has failed to grow since the coalition government took office,” Labour Finance Spokesperson Barbara Edmonds said.
“The results speak for themselves. [Finance Minister] Nicola Willis’ hit list is now higher unemployment, low GDP, and record high migration as Kiwis look to escape the effects of her poor financial decisions,” she added.
The Green Party said the GDP numbers showed the lowest-income households were hurting the most while those at the top were largely unaffected.
“Whether it’s high inflation or a manufactured recession, intentional Government policies see regular New Zealanders pay the price while the rich laugh their way to the bank,” party co-leader Chlöe Swarbrick said.
Willis said that recent indications showed the economy was starting to bounce back.
“Today’s GDP data confirms what we already know – that the economy has been suffering the after-effects of a long cost of living crisis, with the Reserve Bank having to keep rates high to tackle inflation,” Willis said.
She added, “the New Zealand economy is resilient, and it will recover. Forward-looking data shows the work we are doing to rebuild the economy is already having an impact and green shoots of recovery are coming through.”
The change in GDP is one of the three most-watched statistics produced by Stats NZ every three months, for the quarter prior.
Any fall in GDP in the three months to the end of June, could mean the country was going to experience a “triple-dip” recession.
Should the economy be in recession again it would be “triple-dip” after negative growth was recorded in the six months to March 2023, and then again during the second half of last year where quarterly drops of 0.3% and 0.1% in GDP were recorded.