NEW ZEALAND: Tourism, Manufacturing Drive Economic Growth

Tourism, manufacturing drive economic growth

Solid economic growth in recent months confirms the Government’s programme of economic management is on track to deliver more jobs and ongoing wage rises for New Zealanders, Finance Minister Bill English says.

Statistics New Zealand reported Gross Domestic Product expanded by 0.9 per cent in the three months to September – slightly higher than Treasury’s Half-Year Update forecast of 0.6 per cent.

This meant annual economic growth was 2.3 per cent since September 2014. Average annual growth was 2.9 per cent.

“It is clear the economy was softer than expected in the first half 2015 on the back of lower dairy prices. But New Zealand is a confident, open economy that responds quickly to international fluctuations – and we are seeing that in the more positive performance that has occurred since July,” Mr English says.

Growth was led by manufacturing, which grew by 2.8 per cent over the last three months – the biggest increase since 2012. Higher visitor numbers also boosted tourism exports and retail, trade and accommodation services, which were up 1.6 per cent in the quarter. In total the services sector, which makes up 70 per cent of the economy, rose 0.9 per cent.

“Treasury’s latest forecasts, released earlier this week, are for continuing solid economic expansion. They show unemployment dropping to 4.5 per cent after peaking at 6.5 per cent in March 2016. 195,000 jobs are expected to be created by mid-2020, and the average wage is forecast to increase to $63,500.”

New Zealand’s annual growth rate of 2.3 per cent is in line with Australia (2.5 per cent), the United Kingdom (2.3 per cent) and the United States (2.2 per cent) - and is in the top half of all OECD countries.

“Of course risks remain – particularly with a potentially significant El Niño cycle over the summer. Treasury has factored in an impact of 0.3 per cent of GDP, but the final result could be larger.”