The NZ economy outperformed Australia in the June quarter, growing by 0.9% compared to Australia’s 0.4%. Unlike Australia, which saw a 0.3% decline in GDP per capita during the same period, NZ experienced a 0.2% increase in that measure.
NZ’s growth exceeded expectations, with the central bank forecasting 0.5% and the Treasury predicting 0.6% in its pre-election forecast.
Interestingly, Statistics NZ raised doubts about whether the country had experienced a recession earlier this year, despite reporting negative growth of 0.9% in the three months to December 2022 and 0.1% in the first quarter of 2023.
Statistics NZ remained uncertain about the March quarter’s small contraction and whether it would be revised in future updates, as similar revisions have occurred in Australia in the past 15 years. This uncertainty stems from the reduction in the fall in output to around $NZ5 million, which is relatively insignificant in the context of the country’s economy.
If the March quarter figures are revised upward to a small positive or break even, the technical recession would vanish.
However, there was no doubt about the strength of the June quarter’s performance, with the latest quarterly GDP figure pushing the year-to-June economic growth to 3.2%.
“Business services, largely driven by computer system design, led economic growth this quarter,” said Jason Attewell, economic and environmental insights general manager.
Manufacturing activity increased this quarter, breaking a streak of five consecutive quarters of decline. Education and transport, postal, and warehousing also rebounded after a decline in the March quarter, while agriculture, forestry, and fishing declined due to extreme weather events.
Exports, driven by higher dairy, forestry, and meat exports, rose by 5.0%. Household spending grew by 0.4% this quarter, primarily fueled by increased spending on durables, including motor vehicles and audio-visual equipment. These factors, along with increased investment, led to a decrease in inventories, particularly affecting motor vehicle and forestry inventories, mirroring a situation experienced in Australia during the same quarter.
Economists are forecasting minimal growth in the year ahead, anticipating a pullback by consumers due to the upcoming election on October 14.