Economists hail revival of 'rockstar' economy, as strong growth continues video

Kiwis are spending more on going away, eating out and furnishing their houses.

Kiwis are spending more on going away, eating out and furnishing their houses.

A surge in consumer spending and exports helped the economy continue a strong expansion in the middle of the year.

Official figures on Thursday showed the economy grew by 0.9 per cent in the three months to June, lifting annual growth to 3.6 per cent.

As well as a booming construction sector, and the biggest quarterly increase in exports in nearly 20 years, Statistics New Zealand's Gary Dunnet said consumer spending was rising at its fastest rate since 2009.

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The government is giving itself a pat on the back after the economy grew rapidly in the June quarter, but Labour reckons the true picture is not being painted by the figures. Gross domestic product grew by 0.9 per cent in the latest quarter taking annual growth to 3.6 per cent - the third-best growth rate in the OECD. "I think the number reflects there is a bit more confidence around than we thought," said Finance Minister Bill English.

"Household spending was up 1.9 per cent, with Kiwis spending more on going away, eating out and furnishing their houses."

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Driven by increased volumes of dairy products, meat and fruit, exports rose 4 per cent, the fastest quarterly increase since 1998.

Statistics New Zealand also raised the amount it believed the economy grew in the first three months of the year to 0.9 per cent.

Paul Bloxham, the HSBC economist who branded New Zealand as the "rockstar economy" of the OECD back in 2014, said he expected the country's economy would continue to outperform many of its peers in the coming years.

"New Zealand's growth is once again set to outperform most of the developed world and thus reviving its 'rock star status'," Bloxham said, forecasting that New Zealand's growth would remain above 3 per cent for much of the next two years.

The bullish growth forecasts come at a time when New Zealand's population has been climbing at the fastest rate in 40 years, with net migration at an all time high.

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While Statistics New Zealand is unable to measure how much of the current growth comes from migration, consumer spending and construction activity are characteristic of a rising population.

Chris Green, director of economics and strategy at First NZ Capital said once the increased population was taken into account, economic growth per capita rose by a "more modest" 0.5 per cent, while annual growth per capita was below the long-run average.

Labour finance spokesman Grant Robertson said the headline growth figure was less important than how much the economy was growing per person.

"There's a lot of economic activity driven by population growth, but on a per person basis, New Zealand is barely growing economically at all."

Finance Minister Bill English said the figures showed New Zealand remained one of the fastest growing western economies.

"The [growth] number reflects that there's been a bit more confidence around than we thought. More jobs, higher incomes," English said.

"But the world's a challenging place these days. You don't know quite what's going to happen next."

 

 - Stuff

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