NZ economy coming off the boil
New Zealand’s economy appears to be slowing, with the weakest quarter of growth in almost two years announced as earlier quarters were revised downwards.
Yesterday Statistics New Zealand said that in the final three months of 2016 the economy expanded by 0.4 per cent.
Below the 0.7 per cent predicted by market economists, the December quarter represented the slowest three month period for growth since the start of 2015.
It came as Statistics NZ said it now believed the economy grew by 0.8 per cent in the September quarter, revising the original estimate down from 1.1 per cent.
Annual economic growth fell to 2.7 per cent.
The figures come at a time when New Zealand’s population is growing at more than 2 per cent per annum, driven mainly by record inward net migration of more than 70,000 people a year.
On a population basis, the economy grew only 0.5 per cent per capita in 2016, and declined slightly in the final three months of the year, First New Zealand Capital economist Chris Green said.
The recent fall in growth was driven by a weak start to the dairy season, with a wet spring hitting production.
Meanwhile the services component expanded, driven by more demand for business services, arts, recreation, healthcare and residential care.
Statistics NZ national accounts senior manager Gary Dunnet said the figures were ‘‘a mixed bag’’, with only half of the industries measured expanding.
Westpac economist Sarah Drought said some parts of the economy would bounce back in 2017, but the figures suggested activity was softening.
‘‘Although some of this weakness in primary production is temporary and there should be a decent bounce back in early 2017… [today’s] result paints a weaker picture of momentum through the second half of 2016.’’
ASB chief economist Nick Tuffley said the Kaikoura earthquake appeared to have had a negative impact, cutting activity in the transport sector.
‘‘Overall, despite this weaker result, we still see an economy supported by strong tourism demand, construction activity, robust business confidence and healthy household demand.’’
But UBS economist Robin Clements said there were other signs that the economy could be losing momentum that had not yet been captured by the growth figures, such as a decline in building consents and weaker than expected electronic card spending.
‘‘Accelerating growth from here will likely be a challenge.’’
Finance Minister Steven Joyce said New Zealand continued to navigate ‘‘a still challenging international environment’’, with growth stronger than many peers.
‘‘While growth has softened in this latest quarter, the continuing trend is consistent ongoing growth ahead of most other developed countries,’’ Joyce said.
Labour finance spokesman Grant Robertson said the slowdown was widespread, with the fall in per capital production a sign that ‘‘Kiwis are working harder and harder for less’’.
‘‘[P]opulation growth, rather than improving productivity, is propping up the New Zealand economy,’’ Robertson said.
While tourism spending continued to grow strongly, up 5.1 per cent in the December quarter, the growth in household spending dropped to 0.4 per cent, below what the market expected.