NZ economy grew 1.0pc in Sept quarter

By NZPA

Friday 20th December 2002

A consumer spend-up helped boost economic growth by 1.0 percent in the September quarter, Statistics New Zealand said today.

For the year to September the economy grew by 3.9 percent, just a tad under the Government's goal of 4.0 percent growth.

The Government believes New Zealand needs to average at least 4.0 percent growth for over a decade for New Zealanders' standard of living to return to that of the top half of the OECD nations.

The quarterly growth was precisely on economists' expectations.

Despite the economy growing faster, the Reserve Bank believes it's capable of without causing inflation, economists see little risk of the bank hiking interest rates.

The rising dollar is dampening inflation and the economy is expected to slow in the second half of next year.

Growth in the quarter was fuelled by internal demand, which rose 3.3 percent. Higher household spending on consumer items and new housing construction and a build up of inventories underpinned the growth.

Household spending was up 0.6 percent for the quarter and 3.7 percent for the year.

Much of the demand was met by imports which rose 3.1 percent in the quarter. A good deal of the spend-up was on cars -- up over 12 percent in the quarter. But spending on other durables was also strong.

In contrast, exports fell 2.0 percent.

Construction boomed during the quarter, pushed along by the very strong immigration levels this year. Construction rose 11.0 percent in the quarter and was up 7.8 percent in the September year.

Retail, accommodation and restaurant services were up 1.4 percent.

Most other industries recorded small increases with the notable exception of agriculture where production fell by 0.9 percent as wool and dairy production fell.

Despite dairy's fall from its peak, it remains at a high level and 2.4 percent above the September quarter last year.

Lamb production was high as measured by the high number of lambs tailed.

Forestry output increased 5.0 percent for the quarter following a similar increase in the June quarter.

"Logging output is now at a very high level," Government Statistician Brian Pink said.

The strong economic picture tallies with the rosy picture painted by Treasury yesterday. In a budget update, it forecast the economy would expand 4.0 percent in the March 2003 year. That expansion has swollen Government coffers as company profits have improved.

The Government announced its current year projected surplus is now $3.5 billion, more than $1 billion than the budget night projection.

The surplus is projected to rise to over $5 billion within three years and Finance Minister Michael Cullen is mulling tax cuts for poor and middle income earners around the time of the next scheduled election in 2005.

Business investment was flat in the September quarter following a 2.9 percent rise in the June quarter. On an annual basis, investment in fixed assets was up 4.3 percent.

There was a $583 build-up of inventories in the quarter and the rise is $1.5 billion for the year.

Manufacturing activity rose 2.9 percent in the quarter and is up 2.3 percent for the year.

Electricity gas and water production rose 12.9 percent in the quarter and 22.6 percent for the year.

Comments from our readers

No comments yet