New Zealand Economy Outperforms US, UK, Australia with 3.1% GDP Growth
By Reissa Su | March 20, 2014 5:43 PM EST
New Zealand's economy grew 0.9 per cent in the fourth quarter of 2013 which indicates the programs of the government are working, according to Finance Minister Bill English.
New figures released on March 19 showed that the country's GDP had increased to 0.9 per cent in December which total growth in a year to 3.1 per cent.
A picture of Reserve Bank of New Zealand dollar notes. September 3, 2012.
Compared to the same quarter in 2012 which had an annual average growth of 2.7 per cent, New Zealand's GDP was 3.1 per cent higher in the recent December quarter in 2013.
According to Mr English, consumer and business confidence remains high as the manufacturing sector has been growing for nearly one year and a half. The finance minister said New Zealand's current account deficit is "less than half" of what the figure was in 2009.
Mr English said more businesses were willing to in invest for the longer-term to support higher wages and boost productivity. Compared to other developed countries, New Zealand's 0.9 per cent quarterly GDP growth indicated a strong performance.
Mr English, who is gunning for the September 20 election, remarked that "untried experiments" like going back to big-spending policies or changing the Reserve Bank might slow down New Zealand's gains.
The RBNZ raised interest rates before the release of Australia's jobs data which showed significant growth in two years. In February, 47,000 new jobs were created and suggested that employment data is finally catching up with the rest of the economy.
New Zealand moves further ahead of Australia due to a boom in terms-of-trade and in-demand milk exports. The country's biggest exporters of dairy are China and India. New Zealand's economy is expected to have significant gains due to big changes in China which will have a big impact to the island nation's future. New Zealand continues to enjoy a strong import growth for goods consumed by the Chinese middle class with a stronger-than-expected rise of 10.1 per cent in February.
Westpac New Zealand chief economist Dominick Stephens and senior economist Michael Gordon said the Reserve Bank will need to raise interest rates on a gradual basis for this year as the country's economy gathers strength.
On a note to investors, Mr Stephens and Mr Gordon said the housing market will slow down as well as GDP growth and consumer buoyancy. However, they said the process may take years to take effect.
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