Our take on the latest Gross domestic product (Thu 19 Dec 2019)
NZ economy grew 2.7%pa over September 2019 year
Annual revisions show stronger 2018, weaker 2019
Household spending driving current growth, up 2.6%pa
The key numbers...
- Economic activity over the September 2019 year rose 2.7%pa.
- Annual revisions to our economic growth indicators show that growth was higher than previously thought in 2018, but worse in 2019, with June 2019 quarterly growth revised down to just 0.1% (from the 0.6% growth announced previously).
- Private consumption was a key driver of continued economic growth, rising 2.6%pa, with a large contribution from durables spending.
- Non-residential construction pumped up investment in the economy, with a 11%pa rise over the September 2019 year. However, infrastructure investment remains poor, falling 3.2%pa over the same period, and business investment in equipment growth slowed to 4.0%pa.
- Services exports remain subdued in 2019, rising just 0.3%pa rise over the September 2019 year, with growth remaining at the lowest level since the end of 2013.
National economic growth
Quarterly % changes, seasonally adjusted, production-based
...and our reaction
- Annual revisions show that economic activity in 2019 has been lower than we previously thought, even as growth in 2018 was revised higher.
- Softer economic activity throughout 2019 sets the stage for a solid year ahead, with current indicators pointing towards the same or slightly better growth in the near-term.
- Robust household spending is expected to continue to support economic growth over 2020, with faster population growth than previously expected, and a housing market resurgence, buoying spending.
- Investment remains poor, with private business investment remaining subdued and infrastructure investment in decline, amid little signs these indicators will improve markedly in the short term.
- Softer service exports will restrain future growth expectations somewhat, but construction activity and consumption spending are taking up the slack for now.
- The economy is finely poised heading into 2020, with economic activity slowing, but still solid, even as concerns remain about future activity.
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