Economy

A good year for our economy

In 2012 New Zealand’s economy grew at the fastest rate since before the 2009 economic recession.
  • Image, aerial shot of containers stored at Auckland's port.

    Economic activity up in 2012

    Economic growth in 2012 was 2.7 percent, as measured by real gross domestic product (GDP). This rise was the largest annual increase in economic activity since 2007, when the economy grew 3.4 percent. Contributing strongly to the growth in 2012 were the agriculture, construction, and retail trade and accommodation industries.

    Favourable conditions for dairy

    The first half of 2012 brought favourable growing conditions for many dairy-producing regions of New Zealand. These conditions resulted in increased dairy production, which contributed greatly to agriculture industry growth in 2012 (up 16.8 percent). This means that of all industries, agriculture was the largest contributor to the overall growth in the economy.

    The increase in dairy production also affected the dairy product manufacturing industry. Milk solids are an important ingredient in milk powder, butter, and cheese. In 2012, dairy product manufacturing activity increased 11.2 percent. This compared with a 7.4 percent rise in 2011. Dairy products are New Zealand’s major export, with the largest commodity being milk powder, butter, and cheese. In 2012, the volume of dairy products exported by New Zealand was up 14.3 percent, compared with a 10.0 percent rise in 2011.

    Construction picks up

    The construction industry grew 6.0 percent in 2012. This was the largest increase in construction since 2007, or before the recession and the 2010–11 Canterbury earthquakes. The increased construction activity for 2012 occurred mostly during the middle of the year, with both the June and September quarters recording growth of 4.0 percent or more.

    The construction industry is broken down into sub-industries that cover different types of construction, such as those on residential buildings (eg houses), non-residential buildings (eg factories, hospitals, and office buildings), and heavy and civil engineering construction (eg roads and bridges). There is also a sub-industry for construction services, such as demolition, plumbing, and bricklaying. All these sub-industries had increased activity in 2012.

    Residential building construction bounced back in 2012 (up 9.0 percent) from lower activity in 2011. Similarly, construction for non-residential buildings increased in 2012, after a decline in 2011. Rebuilding work after the Canterbury earthquakes was slow. However, some of the growth in the construction industry in 2012 was due to increased activity in Canterbury, showing that rebuilding has started to pick up.

    Retail reaches record level

    The retail trade and accommodation industry grew 3.4 percent in 2012, resulting in the highest level of annual activity ever recorded for the industry. The previous peak was in 2007, before the economic recession. Most of the growth in 2012 was due to the retail trade industry, which was up 4.5 percent. Accommodation and restaurants’ activity also increased over 2012, up 0.9 percent, but this was lower than growth in both 2010 and 2011.

    The services provided by the retail trade and accommodation industry are mainly used by household consumers, either from New Zealand or by visitors from overseas. In 2012, the volume of final purchases by New Zealand-resident households was up 2.3 percent. This increase means that the level of expenditure in volume terms over the year was the highest-ever recorded for New Zealand household consumers.

    The volume of expenditure by households on durable items such as furniture, televisions, and appliances increased in 2012. Prices of these types of goods fell over the year, and this may have contributed to more people purchasing ‘big-ticket’ items such as these.

    GDP explained

    GDP measures the change in the amount of goods and services produced by an economy over time, after deducting the cost of goods and services used in the production process. This is also known as the value-added approach. Real GDP excludes any change in the price of those goods and services over time, therefore it only shows a change in the volume of goods and services produced.

    Source: Statistics New Zealand

This was the largest increase in construction since 2007, or before the recession and the 2010–11 Canterbury earthquakes.
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Economy
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