New Zealand’s economy staggered slightly backward in the three months to June due to weak export growth, the timing of tobacco imports, and weak activity in much of the economy.
However, unlike Australia, where household spending fell in the June quarter, New Zealand saw a solid rise in activity, according to analysis from Westpac economists across the Tasman.
Like Australia, New Zealand is experiencing a growth recession on a per capita basis, where the decline is almost double the rate seen in Australia.
The 0.2% decline in the three months to June helps explain why the Reserve Bank of New Zealand rushed a 0.25% rate cut last month, despite inflation still being above the target range of 1% to 3%, at 3.3% in the June quarter.
Statistics New Zealand stated in its release on Thursday that GDP contracted by 0.2% from the previous quarter, when it had gained a revised 0.1%, down from the initially reported rise of 0.2%.
Economists had expected a 0.4% contraction, while the Reserve Bank of New Zealand (RBNZ) had projected a 0.5% fall.
Year-on-year, GDP was down 0.5%, which was slightly better than market estimates of a 0.6% drop.
Economists note that these figures are preliminary, and there could be revisions in future quarters, as there have been over the past couple of years as Statistics New Zealand gathers better data.
The data shows that retail trade and accommodation; agriculture, forestry, and fishing; and wholesale trade industries all declined over the three months to June.
In a note, Westpac economists in New Zealand stated that manufacturing saw a strong 1.9% rise, and personal services, such as healthcare and recreation, held up better than expected.
“As Stats NZ has noted, changes in the timing of tobacco imports have disrupted the pattern of quarterly GDP to some degree, boosting growth in the March quarter and acting as a drag on growth this time.”
“On the expenditure measure of GDP, there were gains in household spending, government spending, and business investment. Goods exports were the main drag on growth, falling by 4.4% after a strong rise in the March quarter.” Timber exports, in particular, were weaker.
Like Australia, New Zealand is experiencing a recession in growth per capita.
The latest data showed that GDP per capita decreased by 0.5% in the quarter.
New Zealand economists note that the last time GDP per capita increased was in the September 2022 quarter.
On an annual basis, for the year ending June 2024, GDP per capita fell by 2.7%. This is almost double the 1.5% decline seen in Australia over the same period.