Economy grows by 3.1 per cent, on right track

The economy continued to grow by more than 3 per cent in the year to 31 December, confirming that New Zealand remains on the right track under the Government’s economic programme, Finance Minister Bill English says.

Statistics New Zealand today reported gross domestic product expanded by 0.9 per cent in the December quarter and 2.1 per cent in the second half of 2013.

This took annual growth – from the December quarter 2012 to the December quarter 2013 - to 3.1 per cent. Average annual growth was 2.7 per cent.

“Providing we stick with the Government’s successful programme, New Zealanders can lock in the economic gains we’re starting to see through more jobs and higher incomes,” Mr English says.

“Business and consumer confidence remains high, manufacturing activity has been expanding for almost a year and a half and the current account deficit is less than half of what it was five or six years ago.

“However, we still have plenty of work ahead of us to ensure these positive indicators are translated into real opportunities and progress for New Zealanders and their families.”

The solid growth was widespread across the economy in the December quarter.

Manufacturing made the largest contribution to quarterly GDP growth, increasing by 2.1 per cent, taking overall manufacturing activity to its highest level since March 2006.

Wholesale trade, including machinery and equipment, increased 3.2 per cent in the quarter. Investment in plant, machinery and equipment was up by 7.5 per cent to its highest level since the series began.

“This confirms businesses are investing for the long-term to support productivity and higher wages,” Mr English says.

New Zealand’s 0.9 per cent quarterly GDP growth was strong by the standards of other developed countries. It compares with 0.6 per cent in the United States, 0.7 per cent in the United Kingdom and Canada, 0.8 per cent in Australia and 0.2 per cent in Japan.

“We are making good progress but we need to remain  focused on making the enduring structural changes needed for New Zealand to reach its economic potential,” Mr English says.

“Now is certainly not the time to put all of this at risk with untried experiments such as going soft on inflation through changes to the Reserve Bank Act or reverting to big-spending and ineffective policies that have failed in the past.”