The economy grew by a record 14% in the September quarter as the country bounced back from the lockdown earlier in the year.
The result is in line with many economist's projections and slightly ahead of the forecast from the Reserve Bank of a 13.4% rise.
It follows on from a record drop in economic activity in the June quarter, which was first recorded as a 12.2% drop, but which Statistics New Zealand has now revised down to an 11% drop.
While the bounce back has been an extremely sharp one, it still means GDP has shrunk by 2.2% in the year to September.
ASB chief economist Nick Tuffley and senior economist Jane Turner said the NZ economy looked to have been "even more resilient than expected" and has recovered from the impact of the lockdown earlier this year, with quarterly GDP now above pre-Covid levels.
"This is a phenomenal result, and an achievement made by very few other countries in 2020," they said.
"The key question going forward is whether the Q3 momentum can be sustained. Early Q4 indicators look promising, particularly retail spending and housing-related sectors. However, there are a number of headwinds, and this summer will test many tourist operators with international borders still effectively closed. Nonetheless, there is light at the end of the tunnel, with travel bubbles back on the agenda for early 2021 and the first wave of vaccines set to roll out over the coming months."
Stats NZ said there were fewer restrictions on activity in the September 2020 quarter than during the Covid-19 lockdown-impacted June 2020 quarter, though Auckland was at alert level 3 in August.
“This resulted in the strongest quarterly growth in GDP on record in New Zealand, as the economy bounced back from the lockdown earlier in the year when non-essential businesses closed,” national accounts senior manager Paul Pascoe said.
Service industries, which produce about two-thirds of New Zealand’s GDP, rose 11.1% in the quarter, after declining 9.8% in the June 2020 quarter. Goods-producing industries grew 26% and primary industries 4.6%, after falling 15.9% and 7.1% in the June 2020 quarter respectively.
The industries contributing the most to quarterly growth included retail trade and accommodation, up 42.8%, construction, up 52.4% and manufacturing up 17.2%.
“Retail sales values recorded the largest September 2020 quarter rise since the series began in 1995, as people spent more on household goods, cars, and food, while residential building was at the highest-ever levels by volume,” Pascoe said.
“The retail trade and accommodation, and construction, industries were both significantly affected by the alert level 4 restrictions in the previous quarter. Accommodation, restaurants, and bars have also been affected by New Zealand’s border being closed to international travellers since mid-March. This sub-industry is down 11.8% through the year to September 2020.”
Pascoe said GDP was up compared with the September 2019 quarter, indicating that overall the country managed to return to a pre-Covid level of activity.
"However, the effects of Covid-19 have had specific and varied impacts at industry level and, for some industries, these may persist for some time.”
Even though activity across the country largely returned to pre-Covid-19 levels, "we haven’t recouped all the activity or production lost as a result of the lockdown in the June 2020 quarter", Pascoe said.
Kiwibank economists said the economy "bounced back with a vengeance in the third quarter".
"...This is as close as you get to a true V shaped recovery," they said.
"...All industries recorded large increases in activity as we came out of lockdown. The Auckland lockdown over the quarter appears to have had a muted impact.
"The quarterly numbers are hard to digest. Following a lockdown, we saw activity increase substantially with the likes of construction up 52%, retailing up 42%, and accommodation up 107%. So it’s important to look at activity over the year. And our economy is tracking nicely, all things considered. GDP fell 2.2% over the year to September. Sure, that’s the largest annual decline ever recorded. But we’d take that with a smile. Especially when you consider the 5-7% declines originally forecast.
"It’s clear that 95% of our economy is performing particularly well. But we must spare a thought for the other 5%. The true test of the tourism and education sectors is right now, over the peak summer season. And there’s a risk we see activity decline over the 4Q, and/or 1Q 2021. The Australian travel bubble will help, if implemented soon. But there’s billions of international tourist dollars not flowing through our economy over summer."
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111 Comments
Yes, it's certainly amazing that we cannot seem to do anything about all the people who are struggling to afford a roof over their heads and food on the table just so they can keep existing. But you are doing well and feeling quite comfortable, so everyone should hold their tongue and be grateful so you don't have to hear their groaning. Things might be worse elsewhere and people still want to move to New Zealand.. none of that makes the situation here right. It is well within our power to address this growing inequality. I hardly think you would last a day wearing the shoes of our most vulnerable.
You don't wish them a Merry Christmas. You don't give a damn what they are going through.
Of course you would welcome me to simply move along and get out of your way. That would be very convenient. You might want to adjust your expectations though, because the groaning you dislike, is only going to get louder. That's how this plays out. You've had your boot on the face of others for long enough, and you have finally pressed too hard, believing them entirely helpless. People will certainly leave this country, but the discontent and the subsequent backlash will only continue to grow.
by Quiet Desperation | 17th Dec 20, 1:21pm
Yes, it's certainly amazing that we cannot seem to do anything about all the people who are struggling to afford a roof over their heads and food on the table.
But you most definitely can do something about it, my wife is cooking for the homeless as I type and there's no reason you can't do the same. If you're truely and honestly concerned about the homeless you can also offer a spare room or your sofa for one homeless over the X-mas time.
How about it QD?
You think that by just having your wife cook for the homeless, you have done enough... How about we address the systemic issues that create homelessness in the first place? Or would that require more from you than just having someone else do 'charity' for you? I am a female millenial and mentioned here many months ago, that shortly after moving into my own first home, I had people I barely knew move in with me rent free for exactly that reason. They are still here for the foreseeable future. To be honest it was difficult sharing my first private space with other people, but this is the state we are in. My home is their home too for as long as they need it. Our country would be vastly better off if we all opened up the free space we have, so that other people are not so easily preyed upon by those seeking to exploit.
This sums up your philosophy very nicely:
"I sit on a man's back, choking him and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by all possible means—except by getting off his back." - Leo Tolstoy
I can only go off your own words here. You are uninterested in making any changes in your behaviour and the system that benefits you, despite the clear and significant negative impact it has on others. You instead put all the blame on their personal choices. You then think that because your wife does some charity work, like cooking for the homeless occasionally, that you are not a part of the problem - that you are just offering sound advice here to enable others to prosper similarly if they choose. Ignoring the myriad of ways they are kept under your boot regardless of what they do. You and those like you, are riding on the backs of others. Your parasitic greed and the system that supports and rewards it, is choking them. They don't need your wife to cook them a meal every now and then, they need you to get off their backs.
Wow, you're a very angry person ! You say:
"You and those like you, are riding on the backs of others. Your parasitic greed and the system that supports and rewards it, is choking them."
Firstly this is very rude of you and secondly, what on earth do you imagine I do to "be riding back of others, be parasitic and choking others" ???
Well, if you don't get it by now then there's no point in me even trying to explain.
But just to make sure I am not being unfair - I thought you owned multiple residential investment properties, are you saying you only have commercial properties, or is your reference to your 'businesses' your residential properties?
I only have 1 residential tenant and it's my mother-in-law (my wife's dad died last year). My in-laws did well later in life but then lost everything so my wife and her 4 siblings decided to get a rental for them. Within 1 year there was only us and 1 brother paying the rent, two years later, the last brother said he couldn't afford to pay the rent so my wife and I decided to buy them a small house and made sure it was under our name. Not great for the cashflow but at least the capital gain is ours and frankly, too bad if you think that makes us bad people
Ok in that case I apologise. The way you have talked in such a pro-property way over the last couple of years is as if you have a significant residential investment portfolio, and I would presume many others on this website would have thought that. You have clarified that you don't, in which case there's no way I can lump you in with residential investor parasites. So again, apologies
Thankfully theynot empty, they are all leased to commercial tenant, businesses if you prefer. Andd yes I really regret being mortgage free as I was much better off with a mortgage on IO which was tax deductible vs me renting now with 100% of my rent coming out of my back pocket
Ok so in summary: you have 1 residential investment property and several commercial investment properties? You've got a motel business & some business loans. You classify yourself as mortgage free - i.e. no lending against the residential property. You've hugely benefited from housing and taken advantage of the last 25+ years of increasing house prices taking on mortgages. You've been a part of the chase for money through realestate and contributed to the inflation of house pricing. You blame others for not doing what you did, and if they're younger you think they should follow in your footsteps. If not it's their fault that they're not in the same position as you. You try and ignore the inequality that the system has created. To ease your conscience however you sleep better at night when your wife does some charity cooking.
It must be hard when you "find the constant whinging and moaning on this site very tiresome" with all the "righteous non property owners with no experience in buying, owning and selling houses are poisoning the comments section" and when a large amount of them upvote comments calling for the appalling inequality in this country to be addressed, you succinctly deduce "That's about the ratio of strugglers to wealthy people, surely not a coincidence" right?... This must be so frustrating for you to put up with, having such "deep knowledge of RE since I've been dealing with it, day in day out for 25 years and that I know what I'm talking about" with your "multiple properties" (zero residential investments...)
Your comment history is littered with condescending and deprecating comments regarding people who aren't doing as well as you financially, blaming them for their poor choices or not taking better control of their life, completely dismissing any external circumstances that hinder them from getting out of the mud. Cheering on the system and people that perpetuate this. Everyone makes their own life apparently. I'm sure you consider anyone who calls you out a terrible person. Coming from you, it's a compliment.
By your definition, you dislike the very people your wife cooks for, an act of charity for which you try to take credit. Have you ever even talked to a homeless person? Had any conversation with them about how they ended up in that situation and what keeps them there?
'It's their fault they're homeless...they should have taken out a mortgage 25 years ago and bought realestate. We'll buy them some food from our investment tax savings to make us feel good this Christmas. Heck we might even be able to claim tax back on charity donations. Anyway karma and all that aswell right...'
That is frighteningly accurate I suspect. He has zero interest in addressing the underlying causes, in dismantling the exploitative systems from which he benefits. False generosity maintains oppression; it maintains the reliance of the oppressed on the oppressor, it is dehumanizing, it does nothing to change the systems of oppression; true generosity, or rather just basic decency, attempts to create the conditions for liberation.
Yvil,
Yes, those of us who are fortunate should indeed do our bit. This morning, I helped deliver food boxes-to which my wife and I had contributed- to struggling families in Tauranga. But i know that it is just a sticking plaster on a gaping wound.
Of course, some of these people have made bad life choices, but in my experience, most are doing their level best to just stay afloat. I have nothing but contempt for those-like TTP- who write the disadvantaged off as useless beneficiaries. Some are, but when it comes to ripping off the country, they are amateurs compared to white collar crims.
"the welfare of a nation can scarcely be inferred from a measure of national income. If
the GDP is up, why is America down? Distinctions must be kept in mind between
quantity and quality of growth, between costs and returns, and between the short and
long run. Goals for more growth should specify more growth of what and for what." - Simon Kuznets
We can count on the exponential growth in inequality here to see impressive rises in discontentment and polarization. But we'll just continue to look on the bright side of our success.
New Zealand Q1 -1.2 percent Q2 -11 percent Q3 +14 percent
Sweden Q1 +0.3 percent Q2 -8 percent Q3 +4.9 percent. Comparing GDP numbers which undoubtedly will be revised in the coming quarters , without accounting for the various timing of government supports and subsidies is almost meaningless , let alone the various methodologies .
Here's a better comparison of Sweden vs the other 3 Scandinavian economies.
https://www.scoperatings.com/ScopeRatingsApi/api/downloadstudy?id=3ac9d…
Norway is simply tapping into its enormous slush fund but the Swedish are only just doing better economy-wise than the Danes.
COVID has simply exacerbated Finland's struggles with reining in public spending and reforming structural issues.
We need to implement a massive vaccination program with the utmost urgency.
I don't see this sense of urgency duly and fully reflected in our Government - a start in June is simply not fast enough.
The sooner we can safely re-open our borders with Australia and China, the better - our education and tourism sectors deserve a break.
Thats right and to hear that the TIA are still complaining yesterday they need extra government assistance. Its mad - they think that they are owed money from the tax payer.
Maybe as an industry group they would be better to entice those same tax payers to actually spend money at their attractions around the country by offering compelling deals and experiences.
That crying you are hearing is coming from the National Party now realising they have lost the last of their credibility on being the party for the economy.
It must be said a good amount of their so called 'economy' related media releases from them before the election now haven't aged so well at all. It really shows they had (and still have) no idea what they are talking about.
I can't help but think of this print, but instead Jacinda's mug transforms into Key's mug:
FHB's have been crying for some time - this is not a labour caused problem but one that National and Labour have done to the country. Neither are prepared to do what it takes to actually fix the problem (despite what they say).
National wouldn't know what a first home buyer was if they fell over one and Labour are too afraid to spend any political capital on doing the right thing - ending the property investment rort
It is more possible to buy a house with a job than without, so in that regard the government has done a lot better than most of us ever expected this year.
The housing market seems to be 100% tied to interest rates so blame the RBNZ. There is plenty of building going on, plenty of new disincentives to rental investment (insulation requirements, tenancy rights, etc), a rising unemployment rate and a global pandemic. It can only be the latest interest rate cut that has triggered 30% in a year don't you think?
My mates down south all have new Landcruisers too.
Is all that money that was going into interest payments now being spent not saved?
What is the behavioural change that comes with low interest rates, from savers and those with money in the bank?
Is this the first sign of inflation, savers losing big time, or is it all smoke and mirrors?
https://thesoundingline.com/the-rise-of-zombie-companies-continues/?_th…
Inventory for the next few months is gonna be a drag: vehicle dealers are buying stock off each other to give the appearance of yards full of goodies, but that's a Musical Chairs game....Word is that substantial new-vehicle shipments are March-June at the earliest.....and a lot of lesser-unit-value stock is resulting in empty shelves in odd places. Inventory isn't well-counted in the sorts of - er - statistix that SNZ and the GDP inventors have as base data. Supply-chain and logistics issues will make their impact felt early in 2021.....but I'm certainly enjoying my new ute....
Wow! We can just print money, GDP will grow, just need to buy houses from each other. No need to work. Just sit at home and save lives. Also we don't need any tourist, even in Queenstown house prices go up. Probably don't even need milk and meat industry. Everyone on benefit and raise minimal wage to $1,000 per hour. We deserve to live better.
We are in Matrix already. Everything is artificial, fake news, fake economy.
Yup. Perverse how we will have a minimum wage which annualises at over $40K but our student loan repayments kick in at $21K. Meanwhile, the Australians have a similar minimum wage, their student loan repayment threshold is double ours and their repayment rate scales with income - and still tops out below our 12%.
and on that note ... new records ahead
https://www.stuff.co.nz/business/world/300186346/wall-street-wobbles-hi…
I mentioned a while ago that the RBNZ was using house inflation as its injection point for newly created money. My point is it benefits asset owners only (property, shares). Basically they are giving to one lot of people and not the others, how are they going to compensate the rest, the have-nots. I wouldn't be surprised to see massive civil lawsuits against all this MMT (would probably start in America but then go global), because it has consequences for society, they haven't factored this reaction in.
I only voted Labour so they could legalise weed... *sigh*
really though, what choice is there... really? Anyone who manages to climbs over everyone else to reach the the top of the slippery pole of leadership, will usually do whatever it takes to stay there.
Not their fault the public are placated by mask wearing selfie pics
I have to hold my nose when I vote, sometimes. I don't think you make things any better about keeping quiet when things aren't good enough or people are out of touch, even when it is your favourite party. On some level, true tribalism means genuinely wanting your tribe to improve. Otherwise you get malaise dressed up as progress, like the 2017 radical tranformational Labour platform vs. the Labour govt we actually got.
Think of it in terms of how many didn't get paid to consume?
Sep 19 recorded +2.7 % ann. growth, Sep 20 -2.2% according to stats graph.
A significant contraction.
How many more will be seeking the shelter of tree huts, if government transfer payments are terminated?
I suspect lost GDP growth is the same as lost retail sales in the US.
Spending from increased debt for unproductive outcomes does not equate to good. This only serves to increase risk and weaken long term prospects.
We are so fragile at the moment... if economy overheats then rates will have to rise... those betting on rates staying low foreseeable future will cry fowl.
Yep. The other prospect is long run of for ‘those without’ growing in size and disparity which increases pressure on democratic system in self-interest to punish the evil holders of wealth - those who cannot see this have not canvassed history.
Question for you all... how will NZ grow our productive capacity per capital to fix this pickle we’re in.... because that’s the only way out!
I'd like to think via education and training. But that seems... I don't know, so - pedestrian, so last century
So yeah nah, not hopeful they can get productivity up. Unless maybe by promising free weed? But then the weed smokers don't have motivation to work.
Hmm a real conundrum... how to get productivity up...
I know! Immigration then build houses for people.
And we could sell citizenship for lots munny and hope the new migrants will have businesses to employ us.
I'm not getting anywhere on this am I? Help, anyone?
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