Finance Minister and Opposition Finance Spokeswoman spar in Parliament after economic growth in the first quarter of the year comes in at a lacklustre 0.5%, with no movement on per capita GDP

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.”

What’s next?

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.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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27 Comments

Interesting. Robbo explicitly says "economic growth has been driven by an out-of-control housing market and population growth. That's not sustainable." I have little faith in Robbo's ability to transform the economy and let the bubble gently disappear without some destruction. But let's see what happens.

Adams pipes in and says "GDP growth per capita is the lowest since 2011." Well duh. She's indirectly supporting what Robbo is claiming.

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gosh the national part are pathetic as opposition.. I thought they would be more dominant, but doesn't seem the case

I mean, what can they really say!? Moaning about poor gdp growth per capital is damning the last 9 years of national more than the current govt? Adams looks really weak but to be fair she has a tough line to take

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Goodness me, he showed more foresight and honesty in his statements re this at around 1 min that National ever did. Long may it last

Goodness me, he showed more foresight and honesty in his statements re this at around 1 min that National ever did. Long may it last

And possibly incredibly naive. Show me anywhere in the world where a FIRE-focused, bubble-driven economy has been successfully unwound without any collateral damage.

The transition to a more sustainable basis for growth is something for the medium to long term. This immediate issue is this credit bubble which is already blown to breaking point. There is nothing Govt or the RB can do about it save for trying to contain the collateral damage via rate cuts (which given where we already are with the OCR will be pretty difficult). We are completely dependent on what happens to the Aussie banks and events generally. The credit tide has turned and they can’t turn it back

But it is refreshing to have a MoF who least recognises the issues and is prepared to talk about them. It’s a welcome change, you could never see English or Key being this honest.

Bobster - repeat after me 'There is no such thing as sustainable growth'. '

I don't care whether you're party faithful, or whatever - the fact is that growth is exponential and if exponential increases are based on things physical (houses, planetary resources, land) then they end. The last doubling-time is the last half.

Can we put this nonsense behind us please?

And no, Robertson is being either ignorant or duplicitous - for continuing to tout GDP for a start, and for advocating growth just like National did. And not even green growth is sustainable, in case anyong wondered.....

It is pretty clear surely that the current bases for growth (migration and credit growth) are not sustainable. That’s the point he is making, and he’s right. Sustainable does not mean “green”, sustainable means real growth based on productivity growth and not the fools gold of credit and migration that national clung to for 9 years.

Are you saying the Government should not try to do what they are doing because it will do some damage? If not what are you saying ? The National Government's position here has been extremely damaging, the move to the free market economy was extremely damaging and so on. Are we to do nothing out of the fear of the harm it might cause? Then doing nothing becomes harmful too.

He's referring solely to the credit bubble that persist at the moment. It is stretched so much that it better for the economy if it resets asap, which will then aid in the future transformation, else it's only a bandage solution

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Neither Adams nor National have a leg to stand on when it comes to GDP per capita. What was the point of all the tens of thousands of low-productivity immigrants? Instead of importing value, the nation has imported vast new costs - in infrastructure, health, education, you name it - while numerous business sectors are now addicted to low salaries and wages. It's hardly a recipe for any rise in GDP per capita - which means raised living standards across the board. Rather the opposite.

The other side of National's economic strategy has been house price inflation: producing widespread family insecurity and homelessness. And thus more social cost.

And all the time, high numbers of our highly educated, high-productivity-capable young people leave.

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Exactly, hence my statement above, they let things boil over and the current government is left to clean the spills

Then raked over the coals for not performing.

im afraid there isn't enough space here to publish the reserve bank publications of sector performance in the new Zealand economy over the last decade here. Except to say that the comments on page a pub talk and utter rubbish. I see that there are no posters here with knowledge. The finance ministers speech is basically rubbish and not worth talking about.

....said the grumpiest, loudest drunk in the pub

I find your comments just illustrate my point. my garmin loaded my activities for last weekend as 150% of intensity minutes on Saturday alone. Min HR was 120 MAX was 160 over 4000 feet of elevated climbing on the trek. How your training going this week. High performance individual are we? Hows your training going this week? Ha ha ha ha ha ha ha ha ha ha ha ha ……..I havnt been out climbed yet for my age group

Because being obsessed with a fitness app is so conducive to economic productivity?

That's all very true. The one thing you've not mentioned is the cartel pricing on just about everything besides ex-Japan vehicles. All the basic needs like clothing, furniture, groceries!, appliances, car parts, fuel and so on are very expensive. Yet Nats/Labour want to effectively stop the only way around this rort which is to import your own goods online.

My advice to younger people who have not put down roots here is to leave. NZ has a dysgenic problem. Smart kiwis people leave while dumb kiwis are paid to breed and more low-skill people are imported. This can only lead to drop in IQ.

This could be dampened or even reversed. But the politicians do not serve the voting people. They serve the gods of GDP growth like Fletchers and ANZ.

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All I can say is I’m glad we are having the per capita gdp growth discussion. I would like to see it law that politicians cannot quote gdp growth without also quoting gdp per capita.

Well at the very least it gives an indication of the "share of GDP". If it's going backwards, what does that actually say about economic performance and its impact on the individual? We all know it's not perfect, but it's better than nothing. Nevertheless, Adams doesn't seem particularly literate in economic terms considering trends in GDP / GDP per capita are a reflection of the past govt.

“.......Adams doesn’t seem particularly literate......” Vapid. That’s the best adjective I can summon up.

What is Paula's role in parliament?

Village idiot

Given NZ's economy has largely been based on credit including interest free loans etc and borrowing against equity gains then our GDP is fairly arbitrary. You only have to look at successive years of record new vehicle purchases to realise that NZ'ers have been sucked into "have it now, pay later scheme".

Perhaps, NZ will come through next years recession relatively unscathed but if we continue to run our personal finances on credit then we are foolish to believe we are invincible to any global economic shock.

Too many New Zealanders have little understanding of what is happening in the western world. Our media it seems is quite complicit in this regard. Fortunately YouTube is not so restrictive. One has to be very aware of biased sources but there is an enormous cause for concern. For a start try searching for European migration.

growth in construction is a little over 1% now. last year it was nearly 11%. This in itself is dire news.

The fact that the media, and most commentators have glossed over this fact is incredible. With the governments emphasis and preoccupation with kiwibuild this represents an unadulterated disaster of monumental proportions

The comments here debating the measure of GDP versus GDP per capita is academic.

Unless the government can turn this around quickly there will be a lot of pain.

Furthermore I have yet to fully grasp how the government expect to create a transformational economy with current policy settings.

I feel like the conversation should be who cares about GDP anyway?
What does it measure? We made some stuff this year. We broke some stuff and repaired or replaced it. We provided some services. We had a war. Sent some people to prison. And we have put all that together into a completely meaningless %.
Well I feel better. More fulfilled. Safer. Healthier. Happier. Fitter. Better informed. More liberated. Valued.
Ooops except none of these things are measured by GDP. A good thing none of these things matter to people right? Right!? I mean all the literature shows that the more stuff you have the happier you are, right?
The fact that a flood caused a million dollars worth of damage that has been repaired by insurance, I'm glad that's picked up in our head line measure. I'm glad that everyone tells me we are doing so swimmingly because there was an earthquake in one of our largest cities and we have spent a fortune trying to put those lives and properties back together. I mean it's clearly a big positive to good old GDP. Why don't all those Cantabrians get with the program and understand how great for us that earthquake was. Jeez we might have had a recession if we had not had that earthquake. A recession, not a panzy little earthquake. Imagine the horror.
GDP is just a dumb measure. Whether the dumb measure is dumb on a per capita, per sheep, real, mean adjusted or inflation weighted measure doesn't change the fact it is a dumb measure.