GDP numbers today show that the economy slowed across a broad range of industries, said New Zealand Council of Trade Unions Economist Craig Renney.
“There has been higher volatility than normal in the data over the past few quarters, with very strong growth recorded in September data being countered by a decline in this December data. But the fact that the slowdown in growth was prevalent across 9 of the 16 industries measured by Statistics New Zealand suggests that the decline is not being driven by one area alone.”
While quarterly GDP growth fell -0.6%, annual growth remained positive at 2.2%. But it is interesting to note that central government expenditure fell 2.8% in the last quarter, which is the fastest fall since September 1996. This was driven by falls in health spending after COVID. Private consumption continued to grow, suggesting demand for goods and services remains strong.
Renney said “This data is likely to add further debate about the nature of the next interest rate move by the Reserve Bank, which had forecast growth at this point. This is also a faster fall than the market had anticipated. The CTU would question the need for further significant increases in the OCR as growth is declining more quickly than anticipated and further hikes may cause unnecessary economic pain for working people.
“It should also give the Government pause for thought as it heads into the 2023 Budget, as support for the economy and jobs may be needed in the short run.
“While we should be careful about over-interpreting one-quarter of data, it does suggest a real need to have a long-term plan for the economy as we move further away from the challenges of COVID and face the future challenges of the Cyclone Gabrielle rebuild,” said Renney.
