With the possibility that New Zealand faces a deep and prolonged recession because of COVID-19, the news about what happened to GDP in the December 2019 quarter might well pass unremarked. But, for the record, it slipped to its slowest growth rate in six years.
GDP grew by 0.5 percent in the final quarter of last year, and the annual growth rate was 2.3 percent. The annual growth rate was last at that level in the December 2013 quarter, having been as high as 3.9 percent as recently as the final quarter of 2016. The news about what happened to GDP in the December 2019 quarter might well pass unremarked. But, for the record, it slipped to its slowest growth rate in six years.
The news about what happened to GDP in the December 2019 quarter might well pass unremarked. But, for the record, it slipped to its slowest growth rate in six years.
The table below shows the six fastest and six slowest growing industries in 2019, and it reveals some interesting contrasts. The fastest and slowest groups both include a mix of primary, production and service industries. All six of the fastest growing industries had GDP growth rates of greater than four percent, while the six slowest growing industries all actually experienced decreases in their GDP.
The table also indicates that Central Government GDP increased strongly1, while Local Government GDP fell slightly. In addition, it indicates a mix of stronger and weaker industries within the Manufacturing sector. Similarly, part of the Primary sector (i.e. Agriculture) enjoyed relatively rapid growth, while another (Forestry and Logging) experienced a decline.
Looking ahead, the measures to attenuate the spread of COVID-19 are likely to result in large decreases in GDP in the aviation, hospitality, and recreation and arts industries in the medium term. At the other extreme the health related industries are likely to grow strongly. The prospects for the remaining industries, especially those in the private sector, are more difficult to predict. The unknown quantity is whether and how export and domestic demand recovers when the peak of the pandemic has passed.
COVID-19 means that the future will be different, but there will be opportunities to rebuild the national and local economies, and to promote wellbeings more generally
Uncertainty abounds and we are undoubtedly facing economic turmoil. But as the latest edition of Birds Eye View reminded us, the most important commodity right now is a clear head. COVID-19 means that the future will be different, but there will be opportunities to rebuild the national and local economies, and to promote wellbeings more generally.
1 The industry also includes the Defence, Police, Ambulance and Fire services, but it is likely that the Central Government component is the one that has grown the fastest.