New Zealand’s economy expanded a hefty 2.8% in the second quarter, once again blowing forecasts out of the water.
Bank economists had tipped growth of between 1.1% and 1.7%.
Not only was it much higher than expected, but it was 4.3% higher when compared with the December 2019 quarter, the period immediately before NZ’s first covid-19 cases and the introduction of associated restrictions.
The strong quarter-on-quarter lift was led by the service industries – also up 2.8% – as businesses benefited from the now-defunct trans-Tasman bubble. The service industries make up about two-thirds of the economy.
Retail trade and accommodation – up 9.5% – was the largest contributor to GDP growth in the June 2021 quarter, driven by higher activity in accommodation and food services.
“The June 2021 quarter experienced fewer covid-19 restrictions than previous quarters affected by covid-19. Many industries experienced activity at or above pre-covid-19 levels, while some remained below,” national accounts senior manager Paul Pascoe said.
The primary industries lifted 5% while the goods producing industries were up 1.3%.
On an annual average basis the GDP was up 5.1%.
Meanwhile, NZ’s real gross national disposable income (RGNDI), or its ability to buy goods and services from its income, improved 3.4% in the June 2021 quarter.
That, coupled with a population increase of 0.2% over the quarter, lifted RGNDI per capita 3.2% in the quarter.
Economists have said, however, while the second quarter was strong, the latest delta outbreak and lockdown restrictions will take their toll in the third quarter.
"Second-quarter GDP figures are essentially about setting a high water-mark, as we know the third-quarter growth numbers are going to be terrible thanks to lockdowns. We’re expecting a Q3 fall in the order of 6-7% for Q3," said ASB senior economist Mike Jones.
