New Zealand’s economy expanded 0.2% in the first three months of 2024, resulting in the slowest annual growth since March 2021 when the country was still emerging from pandemic restrictions.
Statistics NZ data showed economic activity, as measured by Gross Domestic Product, has essentially flatlined over the past 12 months. Annual growth was also 0.2%, with quarterly movements more-or-less cancelling each other out.
Goods-producing industries faced a difficult quarter with production down 1.3% in the three-month period and 2% over the past year. Construction was hardest hit with a 3.1% decline in the quarter.
The services sectors, which makes up 73% of the entire economy, collectively shrunk 0.1% during the quarter but grew 1% during the year.
Primary industries helped to bolster the overall GDP result with 0.2% quarterly growth and 1.3% annual growth.
BNZ senior economist Doug Steel said milk production had been stronger during the quarter and there had been a record kiwifruit harvest to boost horticulture.
Slow & steady
The economy has shrunk in four of the past six quarters, while GDP per capita has steadily declined and was down 2.4% in the year ended March 2024. This is not quite the longest decline, as the per capita measure declined for seven consecutive quarters in the years after the Global Financial Crisis.
Most economists expected a roughly flat quarterly result, either up or down 0.2%, but the Reserve Bank of New Zealand (RBNZ) picked the 0.2% increase in its most recent forecasts.
BNZ's Steel said anything “near zero” annual growth suggested the economy was operating below its potential output and “clearly contracting” on a per person basis.
Michael Gordon, a senior economist at Westpac NZ, said the economy was likely "only just moving into cool territory" after being very overheated in previous years. Annual economic growth reached 6% in the aftermath of the pandemic and has been intentionally slowed by the RBNZ.
New Zealand’s real gross national disposable income per capita rose 0.4% in the quarter but has declined 3.5% over the past year.
This measures New Zealanders' purchasing power or ability to buy goods and services. The nominal size of the economy was $410 billion, or up 1.6% during the March quarter.
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