17 March 2016

GDP stats highlight two-speed economy

The gap between the tradable and non-tradable parts of the economy has grown to its biggest since 2000 meaning the economy is growing more unbalanced under National’s economic leadership, the Green Party said today.

GDP statistics released today by Statistics New Zealand show that the tradable parts of the New Zealand economy (exporters and trade-exposed businesses) shrunk by 0.8 percent in the December 2015 quarter while the rest of the economy (the non-tradable sector) grew by 0.9 percent over the same period.

“Increased economic activity in the December quarter was again led by growth in the non-tradable sectors especially business services,” Green Party finance spokesperson Julie Anne Genter said.

“However, the tradable sector went backwards this quarter. It’s the tradable sector of our economy that enables us to earn our way in the world.

“The GDP data tells a tale of a two-speed economy: the spending side of the economy is growing while the internationally competitive part of our economy is struggling.”

“And we’re still to see the real impact of the rapid decline in export earnings from the dairy sector flow through to these numbers.”
“For a stronger, more balanced economy, the tradable sector needs to attract more resources and grow faster than the non-tradable sector.”

“After seven years, National are failing to rebalance the economy towards saving, investment, and exports and away from borrowing and consumption.”

The Green Party recommend a number of changes help New Zealand’s exporters.

“A comprehensive capital gains tax (excluding the family home) would help drive capital from property speculation in Auckland into the productive sectors,” said Ms Genter.

“Greater spending on research and development would help our economy diversify.

“Strengthening Kiwibank giving it a stronger public purpose to drive competition in the banking sector would also help lower the costs of capital for businesses looking to expand.”

Tradable versus non-tradable growth in New Zealand

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