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New Zealand GDP rises by 0.5% in Q1

New Zealand GDP rises by 0.5% in Q1

WELLINGTON: New Zealand’s gross domestic product (GDP) posted 0.5-percent rise in the March 2017 quarter, taking New Zealand’s growth rate for the year to 3 percent, New Zealand’s statistics department Stats NZ said.

The size of the economy in current prices being 265 billion NZ dollars (191.3 billion U.S. dollars), Stats NZ said, adding that GDP per capita decreased 0.1 percent, following a 0.2 percent fall in the December 2016 quarter.

The 0.5-percent rise followed an increase of 0.4 percent in the December 2016 quarter, it said.

“Much lower building activity combined with mixed results for the service sector took the shine off higher dairy production and saw a second quarter of moderate overall GDP growth,” national accounts senior manager Gary Dunnet said in a statement.

At an industry level, 11 out of 16 industries increased this quarter, with agriculture and retail trade having the biggest increases, while construction was significantly down, Dunnet said.

Agriculture grew 4.3 percent due to higher milk production. This flowed through to higher dairy product manufacturing, which contributed to the overall rise in food, beverage, and tobacco product manufacturing. Dairy exports fell 11 percent in the March 2017 quarter, resulting in a build-up in dairy inventories, according to the statement.

Construction fell 2.1 percent, with all building sectors showing a fall. Non-residential building construction, declining from a recent peak, was the key driver. This was also reflected with falling investment in both residential and non-residential building construction, it said.

Overall investment was up despite lower building activity and less investment in transport equipment. Investment in plant, machinery and equipment has been the strongest in almost seven years, reflecting higher domestic production and greater imports of machinery, according to Stats NZ.

Activity in the service industries was mixed, up 0.4 percent over the March 2017 quarter. The main driver of growth was retail trade and accommodation. In contrast, transport, postal, and warehousing; and rental hiring and real-estate services were down, the release said.

Household spending bounced back this quarter, up 1.3 percent, reflecting strong growth in retail trade. This rise contributed to an annual growth rate of 4.7 percent, the largest increase in household spending in over a decade, it said.

Net exports were down. Exports of goods and services fell 0.4 percent, while imports of goods and services increased 1.3 percent, it said.

Finance Minister Steven Joyce said that the GDP figures are a reminder of the importance of focusing on policies that create and sustain economic growth.

“Moderate GDP growth over the last six months is a reminder that every economic gain is hard-won in what is still a challenging international environment,” Joyce said in a statement.

“The government will continue to take the right steps to encourage businesses to invest and grow more jobs for New Zealanders,” he said.