New Zealand’s Economy Emerges from Recession with 0.7 Percent Growth in GDP
New Zealand’s economy is showing positive signs of recovery as it grew by 0.7 percent in the December quarter, marking a turnaround from previous post-pandemic record lows.
The growth in the December quarter marks an exit from recession, exceeding expectations with a 0.7 percent increase, although still lower than the previous year by 1.1 percent.
Contrary to the two previous quarters of contraction, with a 1 percent fall in September and a 1.1 percent drop in June, the most significant declines since late 2021, during COVID-19 lockdowns.
The combined six-month decrease was the largest since mid-1991, excluding the contractions.
The main drivers of GDP growth in the December quarter were agriculture, retail, and transport, which saw increases of 1.4 percent, 1.9 percent, and 2.4 percent respectively.
However, these gains were offset by a 3 percent decrease in construction, mainly residential, and telecommunications and internet services.
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GDP per capita, which had been declining for eight consecutive quarters, saw a 0.4 percent increase.
Craig Renney, an economist with the NZ Council of Trade Unions, highlighted that unemployment has risen while business investment has fallen, indicating that there is still a long way to go before full recovery.
Wage growth was at 1.7 percent, significantly lower than the 5.7 percent rise in profits, raising concerns about where the benefits of this growth are being distributed.
Mary Jo Vergara, a Senior Economist at Kiwibank, sees today’s growth as the first step in the economy’s recovery, noting both positive developments and areas of weakness that need to be addressed.
Looking ahead, Vergara is optimistic about the future, pointing to the Reserve Bank’s rate cuts and the potential for stronger economic activity in the coming quarters.
Finance Minister Nicola Willis sees the growth in GDP as a signal that the economy is on the right path, with exports also showing growth.
Despite the progress, there is acknowledgment that there is more work to be done, but with forecasts predicting further growth, the outlook is positive.
