Economy still growing amid global uncertainty

The economy grew faster than forecast in the first half of 2011, but lower than expected growth in the June quarter shows the recovery remains patchy across different sectors, Finance Minister Bill English says.

Statistics New Zealand today confirmed Gross Domestic Product increased 0.1 per cent in the June quarter, following a revised 0.9 per cent rise in the March quarter. This took annual growth to 1.5 per cent in the year to June 30.

“It’s important to remember that in the current environment the figures will jump around from quarter to quarter,” Mr English says. “The Government’s focus is on building faster and more sustainable growth in the long-term.

“The economy has now grown in eight of the past nine quarters and economic growth in the first six months of this year has totalled 1.0 per cent – ahead of Treasury’s Budget forecasts of 0.5 per cent growth for the six months.

“As the Reserve Bank noted in its Monetary Policy Statement last week, New Zealand’s domestic economy is performing relatively well on the back of strong export commodity prices, stabilising household debt and rising business and consumer confidence.

“However, we still face challenges. The global financial markets, from which we borrow, are increasingly volatile and New Zealand exporters face a headwind from the high Kiwi dollar.

“These challenges reinforce the need for New Zealand to get on top of its longstanding reliance on foreign debt and to build faster, more durable growth based on higher domestic savings and productive investment.

“These features will remain the core focus of the Government’s economic programme,” Mr English says.