Economy sluggish in September

Winston Peter
Winston Peter
Economic growth in New Zealand appears to have staggered to a halt in September, with momentum far less than previously assumed.

Statistics New Zealand yesterday released its third-quarter GDP (gross domestic product) figures which showed economic activity rising only 0.2%, in line with the Reserve Bank's forecasts but below economists who were picking, in general, a 0.6% rise in growth.

Finance Minister Bill English was reasonably upbeat about the figures, saying the economy remained on track for moderate growth in the next few years.

''After coming off a good growing season and a strong year for agriculture, other indicators had already pointed to a slightly softer performance in the third quarter,'' he said.

However, New Zealand First leader and former treasurer Winston Peters said there were little grounds for pre-Christmas cheer in the latest growth figures. The New Zealand economy had well and truly run out of steam.

The abysmal growth figure was matched by other bleak economic indicators, he said.

Unemployment was at 7.3%, the current account deficit had blown out and the Government's much-touted budget surplus by 2014-15 was wafer thin, he said.

''Given the picture of ongoing economic weakness, the Government's complacency is inexcusable,'' he said.

Labour finance spokesman David Parker said the anaemic economy was funnelling the meagre proceeds of growth into the hands of a minority of New Zealanders who were already the best off.

''At 0.2%, growth in the last quarter was closer to zero than 1%. The vast majority of New Zealanders are no better off. That's because National is creating the highest inequality levels ever.''

This week, the Government had announced a hike in petrol prices, the external deficit was $10 billion and online job advertisements were down. It was no wonder record numbers of Kiwis were leaving for Australia, Mr Parker said.

Statistics NZ figures showed the weaker-than-expected GDP result reflected payback in many areas of strength seen in the three months ended June, with falls in infrastructure construction and agriculture production in September.

In addition to the softer-than-expected September result, there were downward revisions to growth during the first half of 2012.

ASB economist Christina Leung said the results suggested the boost from earthquake rebuilding was not as great as first thought. While overall construction activity increased in the third quarter, there was a fall in heavy and civil construction activity which mainly consisted of spending on infrastructure.

''This reflects payback from the large increase seen over the previous quarter, perhaps highlighting that some construction projects are quite lumpy.''

On the expenditure side, that was reflected in the large fall in other construction and plant and machinery.

Another area of surprise was agriculture production, she said. While she expected a fall from the strength seen during the first half of the year, the third-quarter fall was greater than milk production figures suggested.

To the extent favourable weather conditions conducive to pasture growth boosted milk production in the first half, production was now easing from those high levels. That drove weaker-than-expected activity in agriculture and food manufacturing sectors, Ms Leung said.

There was a large fall in mining; Statistics NZ noted lower oil and gas extraction activity.

ASB had revised its official cash rate (OCR) forecast and now believed the first rise would come in December next year rather than September.



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