Economy shrinks by 0.2% in first quarter, new GDP figures show

Source: 1News

New Zealand's GDP fell by 0.2% in the March quarter, according to Stats NZ.

The new GDP figures were released on Thursday morning, and comes after a rise of 3% in the December quarter.

Stats NZ national accounts industry and production senior manager Ruvani Ratnayake said primary industries and goods-producing industries drove the decrease.

“We saw lower output in the food, beverage, and tobacco manufacturing sub-industry; and the agriculture, forestry, and fishing industry," she said.

“These declines corresponded to falls in related exports categories, including dairy products; meat products; agriculture and fishing products; and other food, beverage and tobacco products.”

Primary industries were down 1.2% in the quarter and goods producing industries also experienced a slight decline, down 0.1%.

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Meanwhile, growth in the service industry group, which makes up approximately two-thirds of the economy, remained flat. Stats NZ said the result reflected that falls in some industries being offset by rises in others.

Ratnayake said easing Covid-19 restrictions helped some service industries grow.

"Education rose as early childcare centres were able to reopen to greater capacity, while activity in retail trade and transport support services was down in what is traditionally New Zealand’s peak tourist season."

The expenditure measure of GDP was also down 0.1% in the March quarter.

"A fall in net exports, driven by falling exports of goods and services, was offset by rises in household consumption expenditure, government expenditure, and gross fixed capital formation," Stats NZ said.

Prior to the release of the new figures, economists predicted that any GDP growth would either be flat or relatively small.

Earlier in June, ANZ and Westpac economists told Stuff and the NZ Herald that they were expecting a flat result from the March quarter figures.

In the December quarter GDP figures, the country's economy grew by 3% while Kiwis enjoyed a relatively Covid-free summer.

On annual average basis GDP went up 5.1% through the year to March 2022.