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Underlying challenges in stronger GDP news show need for economic action

The economy bounced back from the fall in March GDP to grow by 1.7% in the latest quarter.

CTU Economist Craig Renney said “while this data demonstrates the strength of the economy currently, there is a weakening trend of growth. The risk of recession in this data has been averted, but annual average growth has fallen from 4.9% to 1% in just 3 months”.   

Renney said “since the beginning of COVID the economy has grown by nearly 5% in real terms. Exports of goods and services rose 11.3% last year and annual GDP per capita continued to increase. Together with low unemployment this is a positive sign of the continuing resilience of the New Zealand economy”. 

“However, growth was quite frothy, being driven by strong growth in travel and tourism, accommodation, and hospitality. Manufacturing and construction both saw falls, as did agriculture. There is a need to make sure that all areas of the economy are growing so that we can build a balanced recovery from the effects of COVID”.

CTU Economist Craig Renney said “New Zealand’s economy grew more quickly last quarter (1.7%) than Australia (0.9%), Canada (0.8%), Japan (0.9%), the 19 countries of the Euro area (0.7%), and the OECD average (0.4%). Both the UK and the US saw economic decline last quarter (-0.1% each).

“Making sure that the benefit of this growth extends to all Kiwi households and sectors will be the key to enduring prosperity. The next few quarters of growth will show whether the international factors currently slowing growth globally will continue to feed through to New Zealand”.