18 Jun 2015

English optimistic despite slow GDP growth

6:16 pm on 18 June 2015

The Finance Minister has conceded lower dairy prices are having an effect on the economy but Bill English says growth is still expected to remain strong over the next four years.

National MP, Bill English.

National MP, Bill English. Photo: RNZ / Alexander Robertson

The Labour Party's finance spokesperson, Grant Robertson, does not share his confidence and said the economy faced rough times ahead.

Statistics New Zealand said in the first three months of the year the economy grew just 0.2 percent, much slower than most economists had forecast.

Compared with the same period a year ago the economy grew 2.6 percent on an annual basis.

Mr English said it reflected the success of the Government's policies but Mr Robertson said it was evidence the Government was failing.

He questioned Mr English about the latest economic growth figures in Parliament.

"Is he aware that 21 percent of the weak growth in the economy this quarter came from retail spending, and that 80 percent of that was from Christchurch and Auckland, and does he really think that a recovery from a natural disaster and spending based on a housing bubble is a sustainable economic strategy?" Mr Robertson asked.

Mr English rejected Mr Robertson's criticism and said that Labour was saying people rebuilding Christchurch were not doing real work.

"All those things are contributing to economic growth. We welcome the contribution of hard working New Zealanders and we don't believe that people in Christchurch aren't doing real work."

Mr English did agree the latest growth figure revealed the economy did not do as well as expected in the three months to the end of March.

"Certainly when you get a GDP number of point two that tells you less has been happening than the market expected.

"It's one quarter's numbers ... mainly because the drought reduced production, not prices as the member has been saying in his press releases. The New Zealand economy, however in general is on track for 2.5 to 3 percent growth," he said.

But Mr English told reporters if dairy prices stayed down for longer that would have a continuing negative effect on the economy.

He said lower interest rates and a lower valued dollar would help offset that.

Grant Robertson

Grant Robertson Photo: RNZ / Diego Opatowski

Mr Robertson wanted to know why the Finance Minister was ignoring the more pessimistic views of the Reserve Bank and economists about the state of the economy.

"When Graeme Wheeler, Cameron Bagrie, exporters all over New Zealand are telling him that his economy is only being propped up by retail spending in Canterbury and Auckland isn't it time for him to stop blaming people for telling the truth and admit that he doesn't have a plan for the New Zealand economy?" Mr Robertson asked.

Mr English was not impressed with the question.

"For the member to say the economy's just being propped up by Auckland and Christchurch I mean what's he suggesting is the alternative?

"That somehow we measure it without Auckland and Christchurch, which would be ridiculous. I think it shows the member thinks that Wellington is the centre of the universe and that's the only thing that we should count," he said.

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