Finance Minister Grant Robertson is calling for patience around GDP growth and says it will take time for the economy to embark on the transformation his Government is promising.
But Opposition Finance Spokeswoman Amy Adams is wasting no time getting stuck into Robertson over lacklustre GDP growth figures.
Data from Stats NZ, released on Thursday, showed the economy grew at 0.5% in the first quarter.
This was in line with market forecasts, but 0.1% lower than the third and fourth quarter GDP growth figures from last year.
Per capita growth was also sluggish, unmoved from the December quarter at 0.1% and 0.6% year-on-year. This is the lowest level since 2011.
Adams says the Finance Minister should be particularly worried about the GDP per capita figure, as when he was in Opposition he made a “big song and dance” over those very same numbers.
In the House on Thursday, Adams quoted some of his comments on GDP per capita from when he was in Opposition.
“Does he agree that GDP per capita growth is what matters most for achieving higher material living standards and that falling GDP per capita is showing that New Zealanders were working harder and harder for less, with both of those statements having been made by Grant Robertson?”
Sticking with the theme of quoting political rivals, Robertson responded by quoting former Finance Minister Steven Joyce.
“I would also suggest to the finance spokesperson for the Opposition that she perhaps listen to her predecessor, who said that it was unwise to look at quarterly numbers because they go both up and down.”
Speaking to media before going into the House on Thursday, Robertson said the growth figure was in line with market consensus.
“But as I have said many times, transitioning ourselves to a more productive, more sustainable economy takes some time.”
He admits that when in Opposition, he did call the Government out on its poor GDP per capita record but again says it will take time before gains in this area become evident.
“Bear in mind these are figures for the march quarter… I think most New Zealanders would respect we would need a little bit more time than that before we turn around the economy.”
Meanwhile, economists are divided about where growth is heading over the second quarter of this year.
“There doesn’t appear to be much in the way of special factors holding down the quarterly result – growth was widespread across industries but unremarkable in most cases,” says Westpac Senior Economist Michael Gordon.
“Consequently, we don’t expect to see a strong rebound next time. Our forecast for the June quarter is 0.7% growth, but the risks are to the downside.”
ANZ is also pessimistic – “we don’t think the cycle is out in the cold just yet,” says Senior Economist Liz Kendall.
“Businesses are facing credit and capacity constraints, along with policy uncertainty and margin pressure in the face of rising costs – and these headwinds are flowing through to activity. Encouragingly, businesses are investing. But consumption growth has moderated.”
But ASB Senior Economist Jane Turner is expecting a bounce-back next quarter.
“We expect continued employment growth and rising wages to support household spending growth.”
BNZ’s Head of Research Stephen Toplis says the second half of this year will see a big boost to the economy provided by a substantial easing in fiscal policy.
“Accordingly, we think annual growth will climb back up to 3% by the end of the September quarter.”