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GDP growth figure a shocker
GDP growth figure a shocker
The growth in GDP reported by Statistics New Zealand for the three months to June should be a call to further action by the Government, said the CTU today. At 0.2 percent it is well behind market predictions of around 0.5 percent. The Reserve Bank predicted growth as high as 0.9 percent for the quarter in its recent Monetary Policy Statement.
“The result underlines concerns that the recovery is stalling,” said CTU Economist and Policy Director Bill Rosenberg. “It is not good news for employment growth and for reducing the high level of unemployment. The Government should be looking at further measures to boost activity in the economy and support for people who have lost their jobs. The Reserve Bank should continue to resist rises in interest rates.”
The earthquake in Christchurch occurred after the period reported, and its immediate effect will be a further reduction in economic activity. While the reconstruction of Christchurch will provide some relief to employment, it will not necessarily provide jobs for people outside that region and outside the sectors contributing to the reconstruction.
There is also discouraging news in the imbalance in the economy shown in the results. There has been a significant increase in residential construction, which is good news for that industry, and may help to keep housing prices down, but it is accompanied by a fall of 4.0 percent in manufacturing which has had only two quarters of growth. Manufacturing is at the same level it was in March 2009, which was at the bottom of a fall in output that marked most of the decade.
“These trends do not bode well for the shape of New Zealand coming out of the recession,” said Rosenberg.
Business investment in fixed assets rose during the quarter for the first time in a year. The rise is welcome although it is still 6.5 percent behind where it was a year ago after some very large falls in the last two years. However most of the increase was in intangibles, reflecting exploration activity, and transport equipment. Investment in plant, machinery, and equipment was down 1.5 percent, reflecting the situation in manufacturing. It does not improve the outlook for increases in production and productivity.
Growth in the economy has not matched population growth. GDP per capita fell in the quarter, is still well behind 2008, and is at the same level it was in real terms in June 2004.
ENDS
New Zealand Council of Trade Unions
Te Kauae Kaimahi
The New Zealand Council of Trade Unions Te Kauae Kaimahi brings together over 350,000 New Zealand union members in 40 affiliated unions. We are the united voice for working people and their families in New Zealand.
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