Data released by Stats NZ today showed that the size of the economy fell -0.2% in the June Quarter. CTU Economist Craig Renney said “GDP in June was smaller than June 2023 – meaning no real growth in the economy for at least a year. GDP per capita has been falling since September 2022, with a steeper fall than that found during the Great Financial Crisis.”
“The fact that we are back again in economic decline should be of real concern to those in charge of the economy, and should cause a rethink. Unemployment is rising quickly. Activity in retail trade and wholesale trade has been in decline since 2022. Business investment is lower than this time last year. Building construction fell. Government investment is also falling, with spending being lower than this time last year. There is no driver of growth in the current data to lead the recovery.”
“With data as bad as this, there should be a plan to deliver growth. Every other country highlighted by Statistics New Zealand in its papers saw growth in June 2024. Australia, Canada, China, the European Union, Japan, UK and the US. None of these countries is proposing the kind of economic and fiscal approach currently being delivered in New Zealand. We are at risk of making the currently bad situation worse.”
“With jobs being lost across Aotearoa, and with falling GDP, this is the time to rethink what we are doing. Softer growth and lower interest rates will feed through to lower tax revenues, putting the governments books further at risk. Other countries are seeing growth, and we need to be building a more sustainable economy in the future. When you are in a hole you should generally stop digging. That calls for renewed investment in New Zealand – not less.”
“There are things the government could be doing to make sure that the economy returns to growth, and that the recovery benefits all New Zealanders. We have an energy crisis costing jobs rights now. There are building sites lying idle and workers heading overseas for work. There are stalled school rebuilding projects. Rebuilding Aotearoa now will help with the recovery and make our growth less inflationary when it returns. Its time to change economic track.”