GDP rises 1.7 percent, NEW fiGURES SHOW

The economy has rebounded strongly on the back of improved consumer spending and tourism.

Stats NZ data showed gross domestic product (GDP) rose a seasonally adjusted 1.7 percent in the three months ended June, at the top end of expectations, and compared with a 0.2 percent fall in the previous quarter.

“The reopening of borders, easing of both domestic and international travel restrictions, and fewer domestic restrictions under the orange traffic light setting supported growth in industries that had been most affected by the Covid-19 response measures,” Stats NZ senior manager Ruvani Ratnayake said.

“Households and international visitors spent more on transport, accommodation, eating out, and sports and recreational activities.”

Service industries, which make up about two-thirds of the economy, underpinned overall growth with output rising 2.7 percent on the previous quarter.

However, overall household spending dipped 3.2 percent, driven by lower spending on goods such as used motor vehicles and audio-visual equipment, with a similar fall seen in retail trade activity.

Manufacturing and construction sector activity also contracted.

GDP rose 0.4 percent on the same quarter a year ago, and on an annual average basis eased to 1 percent.

Real disposable income, which measures the real purchasing power of the country, rose 1 percent during the quarter.

ASB senior economist Mark Smith said the rebound in growth showed an underlying momentum in the economy but there would still be challenges ahead.

Stats NZ said New Zealand’s growth rate for the second quarter was the best of most comparable economies, with Australia and Japan growing 0.9 percent, the average of OECD countries 0.4 percent, and small contractions in the US and UK economies..