Economic activity as measured by gross domestic product was up just 0.1 percent in the June 2011 quarter, after a more-than-healthy 0.9 percent increase in the previous three months.
While the pace of growth is slowing – the average forecast was for an increase of 0.5 percent – Statistics New Zealand national accounts manager Rachael Milicich said the economy overall had still expanded 1.5 percent for the year.
Real gross national disposable income (RGNDI), which is a measure of the goods and services New Zealanders have command over, increased 2.8 percent for the year ended June. The difference between GDP growth and the growth in RGNDI is mainly due to the terms of trade, which reached a 37-year high in the June 2011 quarter. A high terms of trade means that New Zealand's export prices are rising faster than import prices.
“It’s important to remember that in the current environment the figures will jump around from quarter to quarter,” finance minister Bill English said.
“The economy has now grown in eight of the past nine quarters and economic growth in the first six months of this year has totalled 1.0 per cent – ahead of Treasury’s Budget forecasts of 0.5 per cent growth for the six months."
ASB economist Jane Turner said strong end‐of‐season dairy production, a lift in housing turnover and strong growth in retail volumes underpinned the growth but was offset by weakness in construction, wholesale trade and communications.
"This is still a robust performance, given the disruption caused by earthquakes in February and June."
Notable movements were in agriculture, up 4.3 percent, and finance, insurance and business services, up 1.5 percent. Manufacturing and construction both suffered small decreases.
The expenditure measure of GDP was up 0.1 percent as well, with a strong performance in durable goods purchased (such as furniture and appliances) partly offset by a drop in non-durable goods (such as food). Export volumes fell 0.5 percent, while imports climbed 1.7 percent.
English said the domestic economy was performing relatively well on the back of strong export commodity prices, stabilising household debt and rising business and consumer confidence.
“However, we still face challenges. The global financial markets, from which we borrow, are increasingly volatile and New Zealand exporters face a headwind from the high Kiwi dollar."
Yesterday Statistics New Zealand announced a seasonally-adjusted account deficit of $2 billion – $0.5 billion larger than the March quarter deficit.
That was due largely to foreign investors' earnings from their investments in New Zealand – earnings rose $0.7 billion as overseas -owned insurance companies began to recover from losses in the previous quarter.
The financial impact of the Canterbury earthquakes were behind short‐term volatility, as were historical revisions. SNZ said it had improved its methodology in estimating investment income inflows and NZ‐owned assets offshore.