November 21st, 2024
New Zealand's economic landscape faced a minor setback as the gross domestic product (GDP) marginally decreased by 0.1 percent in the December 2023 quarter.
This downturn follows a 0.3 percent reduction recorded in the preceding quarter, signaling a continued phase of economic challenges for the country, according to the latest data from Statistics New Zealand.
A closer look at the economic dynamics
The decline was primarily led by a significant downturn in the wholesale trade sector, particularly noted in the grocery, liquor, machinery, and equipment wholesaling segments. Similarly, the retail trade sector, encompassing furniture, electrical, and hardware retailing, alongside food and beverage services, also experienced downturns, contributing to the overall economic contraction.
Industry performance varied
Despite the overarching decline, the quarter saw mixed results across various sectors. Notably, 8 out of 16 industries reported growth, buoyed significantly by the rental, hiring, and real estate services; as well as the public administration, safety, and defence sectors. The latter benefitted from increased activities associated with the New Zealand General Election, as highlighted by Ruvani Ratnayake, Stats NZ's senior manager for national accounts industry and production.
Expenditure and household spending
The expenditure measure of GDP remained unchanged in the quarter, with an uplift in net exports offset by a reduction in retail and wholesale inventories. Household spending, however, rose by 0.5 percent, driven mainly by increased expenditure on services, particularly transport, despite a decrease in consumption of non-durables such as alcoholic beverages and petrol. GDP per capita also saw a decrease, falling by 0.7 percent in the December quarter.
Introducing the GDP income measure
In a bid to offer a more rounded view of the economic situation, Stats NZ introduced the GDP income (GDP(I)) measure. This new metric captures a broader spectrum of economic components, including wages and salaries, business profits, taxes, and subsidies.
"The GDP income measure will provide our customers with a wider view of the economy," Ratnayake said in the media release.
Looking ahead
With the slight decline in GDP and a mixed bag of industry performances, New Zealand's economic outlook remains nuanced. The introduction of the GDP(I) metric promises a broader understanding of economic dynamics as the country navigates through its current economic phase.