NZ GDP slows as consumers shut wallets

Statistics New Zealand has released its national accounts data for the December quarter, which revealed a 0.5% rise in GDP with household consumption spending slowing to its lowest level in six years:

Gross domestic product (GDP) grew 0.5 percent in the December 2019 quarter, after a 0.8 percent rise in the previous quarter, Stats NZ said today.

“Growth this quarter was led by a 0.6 percent rise in the service industries, while primary industries grew 0.5 percent,” national accounts senior manager Ruvani Ratnayake said.

“Growth was mixed at the industry level, with 11 of the 16 industries recording increases.”

Rental, hiring, and real estate led growth in the service industries with a 1.1 percent rise. Public administration and safety (up 2.8 percent) was another notable contributor. Transport, postal, and warehousing was also up 1.5 percent.

“Mining led the growth in the primary industries sector,” Ms Ratnayake said.

Goods-producing industries grew 0.1 percent in the December quarter, driven by increases in electricity, gas, water, and waste services, and construction. Offsetting these increases was a fall in manufacturing.

Household spending grew 0.3 percent this quarter, as annual growth slowed to its lowest level in six years, at 2.7 percent.

“Reduced spending on short shelf-life goods such as food, beverages, and tobacco slowed the growth in household consumption this quarter,” Ms Ratnayake said.

GDP per capita rose 0.2 percent this quarter, following a 0.5 percent increase in the September 2019 quarter.

Annual GDP growth for the year ended December 2019 was 2.3 percent, compared with a 3.2 percent growth in the year ended December 2018.

Annual growth in GDP has been slowing since December 2016 when it was 3.9 percent. From the December 2016 year, annual growth in the services industries (which make up about two-thirds of the economy) halved from 4.1 percent to 2.1 percent in the December 2019 year…


GDP per capita rose 0.2 percent in the December 2019 quarter, following a 0.5 percent increase in the previous quarter. Annual growth in GDP per capita was 0.8 percent.

New Zealand’s ability to buy goods and services from its income grew in the December 2019 quarter. Real gross national disposable income (RGNDI), our measure of the real purchasing power of New Zealand’s disposable income, rose 1.0 percent in the December 2019 quarter. On a per capita basis this rose 0.6 percent.

GDP growth of 0.5 percent in the December 2019 quarter was aided by a 2.6 percent improvement in the terms of trade and a small improvement in the net flow of income overseas. The increase in the net flow of income overseas was the result of small improvements in both net investment income flow and net transfers.

The population increased 0.4 percent over the December 2019 quarter. RGNDI per capita increased 0.6 percent, off the back of a 1.4 percent rise in the previous quarter.

Annually, RGNDI was up 2.7 percent over the December 2019 year, and RGNDI per capita was up 1.2 percent over the December year.

The next chart shows New Zealand’s GDP growth against other developed nations:

Once you strip out its strong population growth (1.5%), New Zealand is lagging.

Leith van Onselen
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