GDP 'good' but below expectations

By Phil Boeyen, ShareChat Business News Editor

Thursday 28th March 2002

New Zealand's economy grew 0.6% in the December quarter, a result Finance Minister Michael Cullen says is good given the impact of September 11 on the economy.

Statistics New Zealand reports that the rise in economic activity in the quarter reflects higher consumer spending coupled with a rise in new housing investment and increased business investment.

Some economists had been expecting more than 1% growth for the quarter. The increase of 0.6% lifted economic growth for the year ended December to 2.4% compared with 3.8% the previous year.

Business investment in fixed assets increased 8.5% following a 6.6% fall in the September quarter. Dr Cullen says the improvement is significant for the economy's future prospects.

"The post-11 September contraction in tourism was a big driver in the December figures, contributing to a 7.3% decline in exported services.

"Indications are that tourist numbers have bounced back this year. That rebound - together with evidence that the strength in the domestic economy has been sustained - suggest that steady growth will be maintained through the next few quarters.

Statistics NZ says internal demand was up 2.5% with a significant portion from imports, up 3.2%. Partly offsetting the increase in internal demand were lower export volumes, down 2.6%.

Household spending grew by 1.4% during the quarter with increased expenditure on big-ticket items such as furniture, appliances, computers and vehicles.

"In addition, investment in new housing showed strong growth, up 20.3% for the quarter. However, despite this quarter's increase, new housing construction is down 9.5% for the year ended December 2001," Statistics NZ says.

"Notable falls in export volumes were recorded for dairy products and travel services. Much of the decline in travel and transport services can be attributed to the impact of lower December quarter overseas visitor numbers following the September 11 terrorist attacks on the US."

The level of industry production activity was mixed during the quarter with construction, retail trade, finance, business and personal services all recording increases but travel and tourism related industries declining.

Primary and manufacturing industries were also lower but agriculture showed a small increase with higher dairy output countering falls in wool production, which was down due to wet weather disrupting the normal shearing pattern.

Comments from our readers

No comments yet