21 March 2013

GDP figures reveal shrinking tradable sector

Increased economic activity in the final quarter of 2012 is not the good news story the Government is painting with economic activity in the tradable sector of the economy actually declining, the Green Party said today.

Parliamentary Library analysis of the December 2012 GDP statistics released today show that tradable GDP fell 0.6 percent in the December 2012 quarter, while non-tradable GDP rose 2.3 percent resulting in the overall increase of 1.5%.

“Increased economic activity in the December quarter was led by strong growth in the non-tradable sectors such as construction and retail,” said Green Party Co-leader Dr Russel Norman.

“However, the tradable sector went backwards in December.

“The tradable sector of our economy is the sector that enables us to earn our way in the world. Under National’s economic management, the tradable sector shrunk this quarter.

“A shrinking tradable sector combined with a strongly growing non-tradable sector means only one thing – increased borrowing and a ballooning current account deficit.

“This is exactly the kind of economic recovery that makes us vulnerable to larger shocks in the longer term.

“Bill English used to once worry about economic rebalancing. Now he’s content to take any kind of growth, even if it’s growth fuelled by increasing foreign indebtedness and foreign ownership of our economy.”

Dr Norman was concerned that National’s complacency over the quality of economic growth was repeating all the same mistakes of the previous Labour Government’s.

“National is revisiting the sins of the previous Labour Government by letting housing get out of control. At the same time, they are ignoring the fact that the tradable sector is becoming less diverse and adding less value.

“When this happened in the mid-2000s, it was a tragedy; this time it is a farce.

“If we look at the increased activity in the tradable sector, we see a growing reliance on a couple of export commodities – milk powder and raw logs. This is not a resilient, high-value export strategy.

“Even in a ‘strong’ quarter, the manufacturing sector still failed to grow.

“Manufacturing is a key sector for driving high, value-added exports and creating well-paid jobs. Under National, manufacturing has continued to contract, shedding 17,000 jobs in the last year alone.

“The Manufacturing Inquiry is timely and we hope the National Government will use our findings to help address the growing imbalances in our economy.”

Parliamentary Library graph:

Click for big version.

ENDS

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