New Zealand economy grows strongly in Q3, but recession clouds ahead
2022.12.14 17:36
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© Reuters. View of an entrance to the Reserve Bank of New Zealand in Wellington, New Zealand November 10, 2022. REUTERS/Lucy Craymer/File Photo
By Lucy Craymer
WELLINGTON (Reuters) -New Zealand’s economy grew strongly in the third quarter as its international borders fully reopened and travel spending rose sharply, while increased spending in the construction sector boosted building and engineering activity.
Official data out on Thursday showed gross domestic product (GDP) rose 2.0% in the September quarter, more than double forecasts for a 0.9% gain and improving on the revised 1.9% rise seen in the second quarter.
Annual growth jumped to 6.4%, as healthcare, travel and construction all saw significant growth, while gains were influenced down by the timing of various lockdowns in comparative periods.
The strong growth looks set to fade, however, with expectations the central bank’s aggressive tightening cycle will push the economy into a recession next year.
On Wednesday, the Treasury forecast the country would see three quarters of negative growth starting in the second quarter of next year, while the Reserve Bank of New Zealand is even more pessimistic, having forecast a year-long recession beginning in the second quarter of next year.
The full reopening of the country’s borders on August 1 contributed to new demand as the transport, postal and warehousing industry grew 9.7% on the previous quarter.
“With borders opening to all visitors in the September 2022 quarter, we have seen more spending on both international domestic air travel,” said Statistics NZ’s industry and production senior manager Ruvani Ratnayake.
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