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New Zealand's June quarter GDP jumps as election day nears
September 21, 2017 / 12:53 AM / a month ago

New Zealand's June quarter GDP jumps as election day nears

FILE PHOTO: Pedestrians walk past a sailing boat as it passes in front of the central business district (CBD) of Wellington in New Zealand, July 2, 2017. REUTERS/David Gray/File Photo

WELLINGTON (Reuters) - New Zealand’s gross domestic product jumped in the second quarter, data showed on Thursday, with economic growth a central issue in the country’s impending general election.

Seasonally adjusted GDP rose 0.8 percent in the three months to the end of June, Statistics New Zealand said, up from a revised 0.6 percent the previous quarter. Annual GDP was left unchanged at 2.5 percent.

The quarterly jump was largely due to a flurry of spending as tourists flooded the country for a British and Irish Lions rugby tour and the World Masters’ games, which pushed retail spending and accommodation up 2.8 percent.

“We expected the June quarter to mark the high point for growth this year, given the one-off boost from tourism and a rebound in agriculture and transport,” Michael Gordon, senior economist at Westpac Bank, said in a research note.

“In that light, a 0.8 percent quarterly rise is not that impressive,” he said.

The growth was in line with analysts’ expectations, though slightly below the central bank’s projection of 0.9 percent growth.

Politicians pounced on the results, with the ruling National Party quick to point out that the economy was still among the better performing in the OECD, a factor Capital Economics said was likely to “give the National Party a bit of a boost” in Saturday’s general election.

But Grant Robertson, finance spokesman for the resurgent opposition Labour Party, cast the GDP data in a less than flattering light.

“Today’s GDP figures reflect an economy that the National Government has allowed to drift along on the basis of growing population rather than improving productivity and adding value,” he said in an emailed statement.

Thursday’s outcome is unlikely to divert the Reserve Bank of New Zealand (RBNZ) from its firm path of keeping rates on hold at record lows of 1.75 percent for years to stoke inflation.

“From the RBNZ’s viewpoint, today’s data suggests that the economy continues to expand largely in-line with the August Monetary Policy Statement forecasts,” said Kiwibank economist Zoe Wallis.

New Zealand’s economic growth has been the envy of the developed world in recent years, often above 3 percent, but it encountered headwinds towards the end of 2016.

As in the previous quarter, the construction sector dragged on growth, falling 1.1 percent. The sector has been struggling with a labor shortage and rising costs.

GDP expenditure also grew 1.1 percent in the June quarter, largely due to exports rising on stronger prices for dairy, the country’s largest goods export.

The New Zealand dollar NZD=D4 edged down to $0.7350 from $0.7364 after the data was issued, and was trading at $0.7331 at 0137 gmt.

Reporting by Charlotte Greenfield; Editing by Eric Meijer

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