15 Dec 2022

GDP grows 2 percent in third quarter

11:31 am on 15 December 2022
Buildings under construction in Lyall Bay, Wellington

Exports and construction industries boosted activity in the third quarter. (file picture) Photo: RNZ / Angus Dreaver

Open borders and a lift in tourism, along with a strong construction sector have driven economic growth at a faster than expected rate coming out of winter and posing more challenges for the Reserve Bank.

Stats NZ figures showed gross domestic product (GDP) grew a seasonally adjusted 2 percent in the three months ended September, after rising a revised 1.9 percent in the June quarter.

The result was double what had been expected by forecasters, and took the annual growth rate to 6.4 percent.

"With borders opening to all visitors in the September 2022 quarter, we have seen more spending on both international and domestic air travel," Stats NZ senior manager Ruvani Ratnayake said.

"The business services industry also contributed to the result, driven by computer system services, recruitment services, and travel agency and tour arrangement services."

Service industries, which make up about two-thirds of the economy, rose 2 percent on the previous quarter, construction rose 5.1 percent.

Exports of goods and services rose 7.8 percent, driven by higher exports of dairy products, travel services, and meat products.

However, household consumption fell marginally, and activity in the retail and accommodation sectors fell 0.7 percent.

The Reserve Bank has said it is trying to engineer a recession by curbing consumption through higher interest rates as it battles to contain inflation of 7.2 percent.

Economists, the RBNZ and Treasury are all picking a "shallow" recession from the middle of next year which is expected to last possibly 12 months or more.

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