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Decline in GDP shows need for continued government support

Image of NZCTU Economist Craig Renney

The Council of Trade Unions says that gross domestic product (GDP) figures out today demonstrate the continuing need for financial support from government.

“The recovery from COVID-19 continues to be uneven. When today’s GDP data is combined with recent unemployment and inflation numbers, we see a society where some people are experiencing significant financial hardship,” CTU Economist Craig Renney said.

“The fall in the economy was broad-based, with falls in 7 of the 16 sectors of the economy. Annually, construction output fell by 7.3%, manufacturing fell 3.1%, and the primary sector fell 2.5%. Falls were not just in the private sector, with education and training output falling 3.9% annually. Overall, GDP per capita fell 4.9% annually.”

“Internationally, the figures show New Zealand has benefitted from its short-term response to COVID-19, with growth falling less than in many other countries. But some of the traditional indicators of economic health showed grounds for concern. Business investment fell 3.1% quarterly, with the decline present in most areas. Household consumption of durable goods fell 1.5% quarterly. Exports of goods overall fell 3.5%.”

“These figures provide compelling evidence that the road to building back better from COVID-19 in New Zealand will require more work. Government’s contribution to GDP growth was less than it was in 2019. If we are to genuinely see a more productive, sustainable, and inclusive society in the future then further government investment will be necessary – both to protect the fragile recovery and to rebuild essential services. We have expectations that that 2021 Budget will provide real opportunities to help cement positive changes in the society that all Kiwis need,” Renney said.