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Low quality growth in New Zealand’s production is not a good basis for better living standards

“We are seeing low quality growth in what New Zealand produces,” says CTU Economist Bill Rosenberg commenting on the June GDP growth statistics released today. “Not all growth is equal.”

“Much of the growth is driven by the rising population, with high net immigration. Per person, GDP rose only 0.7% over the year – well below the 1.6% per year average since 2012 (after the recession ended), and far below the 2.6% per year average from 2000 to 2007, before the recession began.

“Productivity, GDP per hour worked, looks even worse. It probably fell over the year to June,” says Rosenberg. “Weak productivity growth is a poor basis for future growth in wages, salaries and living standards. Rather than doing things better we are doing more of the same, and many of those things such as agricultural commodities and tourism are low wage, low value-added. The share of manufacturing in our production is gradually shrinking.”

“To make things worse, the income New Zealand generates is getting less fairly shared. After housing costs are taken into account, last week’s Ministry of Social Development report showed inequality up on three different measures since 2008/09”, says Rosenberg.