New Zealand’s economy got 0.1% smaller in the last three months of 2023, bringing annual growth for the calendar year to just 0.6%.
Stats NZ reported gross domestic product had fallen for a second quarter, after the 0.3% decline in the September quarter.
This result was a small surprise for forecasters who expected 0.1% growth and the Reserve Bank which predicted no change during the quarter.
The largest downward drivers came from a 1.8% decline in the wholesale trade of items such as groceries, liquor, machinery, and equipment, Stats NZ said.
Retail trade in things such as furniture, electrical goods, hardware, and food and beverage services were also weak with a 0.9% fall.
Industry level results were mixed with half increasing during the quarter. Rental, hiring, and real estate services rose 1%, and with public administration, safety, and defence were up 2.8%.
Ruvani Ratnayake, a senior manager at Stats NZ, said the general election boosted activity in the public administration sector. This likely includes temporary workers hired to collect and count votes.
The expenditure measure of GDP was flat in the December quarter, with rising net exports being offset by businesses running down their inventory levels without restocking.
Data showed inventory levels dropped $1.3 billion in the quarter, after having risen $681 million in the September quarter.
Household spending grew 0.5% with more money being spent on transport services and less on alcoholic beverages and petrol.
This data release was the first which officially included a new income-based measure of GDP, as opposed to the existing production and expenditure measures.
Stats NZ said the income measure captures wages, profits, taxes, and subsidies in non-inflation adjusted prices. It will provide a “wider view” of the economy but not replace headline GDP.
This income measure fell 0.6% in the December quarter on a nominal, seasonally adjusted basis, while inflation-adjusted expenditure on GDP was flat.
Recession per person
What this data shows is that GDP per capita dropped 0.7% as the population grew by 0.6%.
New Zealander’s purchasing power fell 1.4% at a headline level and 2% on a per person basis, as measured by real gross national disposable income (RGNDI).
RGNDI is essentially a resident’s ability to buy goods and services from the countries income and it has declined 2.8% across the 2023 calendar year on a per capita basis.
This is in part because export prices have fallen 4.2% while import prices have risen 3.8%, hurting the terms of trade and meaning residents can buy less from any given level of economic activity.
Nominal GDP, which best matches the Government’s tax take, was up 0.6% during the quarter and 4% in the calendar year, bringing the total size of the economy to $405 billion.
There were only minor historical revisions to previous data over the past four quarters.
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