Gross domestic product: March 2021 quarter
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Gross domestic product: March 2021 quarter
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Key facts
In the March 2021 quarter compared with the December 2020 quarter:
- GDP was up 1.6 percent
- service industries rose 1.1 percent
- goods producing industries rose 2.4 percent
- primary industries rose 0.3 percent
- GDP per capita rose 1.5 percent
- real gross national disposable income rose 0.9 percent
- average annual GDP to March 2021 fell 2.3 percent
- size of the economy is $325 billion in current prices in the year ended March 2021.
New Zealand economy up in March 2021 quarter
Economic activity, as measured by gross domestic product (GDP) rose 1.6 percent in the March 2021 quarter. This follows a 1.0 percent fall in the December 2020 quarter. Average annual GDP declined 2.3 percent through the year to March 2021.
All industry groups rose in the March 2021 quarter. Service industries, which make up about two-thirds of the economy, rose 1.1 percent. Goods producing industries, which make up about one-fifth of the economy, rose 2.4 percent. Primary industries, which make up around 7 percent of the economy, rose 0.3 percent. Unallocated taxes, which includes GST and import duties, which makes up the remainder of the economy, rose by 7.2 percent.
COVID still impacting GDP
Globally, the COVID-19 pandemic continued to affect trade and travel flows. New Zealand’s border remained closed to almost all travellers throughout the March 2021 quarter, with the exception of New Zealand citizens, residents with valid travel conditions, and those granted approval to travel.
Several community cases of COVID-19 were detected in Auckland during the March 2021 quarter, and as a result, Auckland spent 10 days at alert level 3 and 10 days at alert level 2, while the rest of New Zealand spent 10 days at alert level 2.
Australia allowed New Zealand travellers from areas marked as ‘non-COVID designated hotspots’ to enter the country without mandatory quarantine from 16 October 2020.
Wage subsidy payments (called Wage Subsidy March 2021) were in place from 4 March 2021 to 21 March 2021, to assist employees and self-employed people affected by the alert level changes.
New Zealand’s COVID-19 vaccination programme commenced in February 2021 with border and managed isolation quarantine staff, high-risk frontline workers, people living in high-risk locations, and household contacts of these groups receiving the vaccine.
Service industries lead GDP growth
Service industries rose 1.1 percent in the March 2021 quarter, following a subdued 0.2 percent increase in the December 2020 quarter. Growth in service industries was broad-based in the March 2021 quarter. Notable contributors were wholesale trade (up 4.0 percent), business services (up 1.9 percent), healthcare and social assistance (up 2.8 percent), and retail trade and accommodation (up 2.3 percent).
The rise in wholesale trade was driven by strong growth in machinery and equipment wholesaling, and motor vehicle and motor vehicle parts wholesaling. Corresponding increases were seen in investment in plant, machinery and equipment, transport equipment, and higher household spending on motor vehicles this quarter.
Business services posted a third consecutive quarter of growth, with most sub-industries reporting rises. On an annual basis, business services fell 3.4 percent.
Goods-producing industries rise in the March 2021 quarter
Goods-producing industries rose 2.4 in the March 2021 quarter. This follows a decline of 3.1 percent in the December 2020 quarter. Annually, goods-producing industries fell 2.5 percent over the year ended March 2021.
Construction was the main contributor, rising 6.6 percent and reversing a decline last quarter. Positive results in construction services, residential construction, non-residential construction, and heavy and civil engineering all contributed to strong growth in construction. Construction was the largest industry contributing to the rise in GDP in the quarter.
On an annual basis, construction fell 5.0 percent, due to the adverse impact of the alert level 4 lockdown in the June 2020 quarter on construction activity.
Primary industries also rise
Economic activity in the primary industries rose 0.3 percent in the quarter, following a fall of 0.8 percent in the December 2020 quarter. Rises in agriculture and forestry were partially offset by falls in mining and fishing.
Annually, primary industries were down 3.8 percent in the year ended March 2021, driven by a decline in mining.
Unallocated taxes rise 7.2 percent
Unallocated taxes, which comprise taxes on production (such as GST and import duties) that are not able to be allocated to specific industries, also contribute to GDP.
Import volumes of tobacco, electrical goods, and motor vehicles were all higher than is usual for a March quarter, contributing to the rise in import duties. The effects of the pandemic on global transport and supply chains have affected the pattern of goods imports.
The rise in tobacco imports follows changes to tobacco excise, which have dropped to 1.4 percent, following annual increases of 10 percent a year over 2016–2020. This has resulted in imports being more evenly spread over December 2020 and March 2021 quarters, whereas previously imports were heavily concentrated in December quarters, ahead of the annual rise in excise.
Domestic spending buoys economic activity in March 2021 quarter
Expenditure on GDP rose 1.4 percent in the March 2021 quarter. This follows a 1.5 percent decline in the December 2020 quarter. On an annual basis, expenditure on GDP fell 0.4 percent in the year ended March 2021.
Household spending shows strong growth
Household consumption expenditure rose 5.5 percent in the quarter. Increased spending was recorded on services such as accommodation, restaurants and cultural services, and on durable goods such as motor vehicles, audio visual equipment and clothing.
Household spending on accommodation and restaurants helped support growth in the accommodation and food services industry, up 2.3 percent in the March 2021 quarter. This is despite the continued impact of the border restrictions, and the resulting impact on international tourism.
Capital investment rises
Gross fixed capital formation grew 6.4 percent in the March 2021 quarter, after a revised 0.7 percent fall in the December 2020 quarter.
The largest driver of the increase was investment in plant, machinery, and equipment, which rose 15.5 percent in the March 2021 quarter. This was followed by an 18.5 percent rise in transport equipment, which reflected an increase in motor vehicle purchases. Residential building also contributed to growth and remains at historically high levels.
On an annual basis, gross fixed capital formation is down 4.7 percent in the year ended March 2021.
Net exports remain a drag on growth
Falling exports and rising imports made a negative contribution to expenditure on GDP in the March 2021 quarter. Both remain well below pre-COVID-19 levels.
Exports fell by 8.0 percent, driven by significant falls in exports of services (down 20.2 percent quarterly and 48.7 percent annually). This reflects the continued impact of COVID-19 border restrictions on international visitor and education spending at a time of year when it normally increases. On an annual basis exports declined by 15.9 percent.
Imports rose by 7.1 percent in the March 2021 quarter, driven by rises in most goods categories. Consumption goods and petrol were the main drivers this quarter. On an annual basis imports fell by 16.2 percent.
New Zealand's real purchasing power improves
While GDP measures economic activity, real gross national disposable income (RGNDI) measures the volumes of goods and services that New Zealand residents have command over, that is, the real purchasing power of the country’s disposable income. RGNDI is also affected by changes in the terms of trade, the country’s net investment income, and net transfer flows with the rest of the world.
New Zealand’s ability to buy goods and services from its income, RGNDI, improved 0.9 percent in the March 2021 quarter. While economic activity rose and the terms of trade improved marginally, our net investment income on international investments and net transfer flows worsened.
The 0.9 percent improvement in RGNDI, coupled with a population increase of 0.2 percent over the quarter, lifted RGNDI per capita 0.7 percent in the quarter.
Annually, RGNDI fell 1.9 percent over the year to March 2021 while RGNDI per capita fell 3.6 percent over the year.
Both export and import prices fell 0.8 percent in the quarter, lifting the terms of trade 0.1 percent in the quarter. An increase in the terms of trade results in fewer exports being required to pay for a given volume of imports. This means that residents can purchase more goods and services by volume from the income generated from a given level of domestic production.
International trade: March 2021 quarter has more information about terms of trade export and import price movements.
Balance of payments and international investment position: March 2021 quarter has more information on net investment income and transfer flows.
International growth comparisons – New Zealand and trade partners, March 2021 quarter
Economic activity in other selected economies continues to be varied, and reflects differences in responses to the COVID-19 pandemic, as well as structural differences in economies.
The 1.6 percent rise in New Zealand’s March 2021 quarter GDP was similar to the rises in Australia and the United States, which rose 1.8 and 1.6 percent, respectively.
|
Country |
Quarterly percentage change in GDP, March 2021 quarter |
Change from same quarter previous year |
|---|---|---|
|
New Zealand |
1.6 |
2.4 |
|
Australia |
1.8 |
1.1 |
|
Canada |
1.4 |
0.3 |
|
Euro area (19 countries) |
-0.3 |
-1.3 |
|
European Union (27 countries) |
-0.1 |
-1.2 |
|
Japan |
-1.0 |
-1.5 |
|
OECD – Total |
0.3 |
-0.8 |
|
United Kingdom |
-1.5 |
-6.1 |
|
United States |
1.6 |
0.4 |
|
Note: As at 15 June 2021. See OECD.Stat for GDP data covering other countries. Care should be taken when comparing New Zealand’s GDP figures with those of other countries, as the methodology used varies internationally. Stats NZ publishes both ‘average annual growth’ and ‘year on year’ (change from same quarter previous year) GDP growth rates. ‘Average annual growth’ is Stats NZ’s preferred measure, but it is not available from the OECD website for all countries each quarter. For more information on average annual growth and year on year growth, please see National accounts quarterlies – DataInfo+. |
||
Growth since pre-COVID (December 2019–March 2021)
The COVID-19 pandemic and associated responses have generated unprecedented changes in the GDP measures. The alert level 4 lockdown largely impacted economic activity in the June 2020 quarter when a large decline in GDP was measured. With the lowering of COVID-19 alert levels, economic activity experienced a historically large rebound in the September 2020 quarter.
Usually, annual measures of GDP growth can be useful to see through any volatility in quarterly GDP measurement. However, the sharp changes in activity brought on by COVID-19 make the usual annual measures of GDP growth more difficult to interpret.
The measures of change from the same quarter of the previous year compare the March 2021 quarter with economic activity in the March 2020 quarter. However, since activity in the March 2020 quarter was held back by the COVID-19 alert level 4 lockdown that began near the end of the quarter, the growth measures for March 2021 quarter’s activity are against a slightly depressed base quarter in March 2020.
Annual average growth measures are similarly affected. For this quarter, average annual growth measures compare activity over the most recent year (sum of activity in June 2020 to March 2020 quarters) with activity over the previous year (sum of activity in June 2019 to March 2020 quarters). Because the March 2020 quarter is now part of the previous year in this calculation, the latest year’s activity is being compared against a slightly depressed base year.
The following table shows the change in activity since the December 2019 quarter, which we consider the last quarter unaffected by the impact of COVID-19. This may be useful for making inferences about the impact of COVID-19 on the current level of economic activity. This measure is derived by comparing the level of activity in each industry or aggregate in the March 2021 quarter with the level for the same industry or aggregate in the December 2019 quarter. Positive growth indicates that an industry was operating above pre-COVID levels, while a decline indicates that an industry was operating below pre-COVID levels.
Transport, postal, and warehousing fell by 28.1 percent compared with December 2019 quarter, with this industry the most severely affected by the COVID-19 pandemic and associated response. Continued border restrictions have led to a historic decline in air transport, while alert level changes have restricted domestic travel over the period, affecting road and rail transport.
The ongoing impact of border closures on international students has adversely affected the education industry. Arts, recreation, and other services is another industry that has been impacted by restrictions to manage COVID-19.
Overall, most industries have recorded positive results compared to December 2019 quarter. As a result the March 2021 quarter GDP is above pre-COVID-19 levels, rising 0.8 percent when compared to December 2019 quarter.
| % | |
|---|---|
| Agriculture, forestry, and fishing | 0.9 |
| Mining | -20.1 |
| Primary industries | -2.7 |
| Manufacturing | 2.7 |
| Electricity, gas, water, and waste services | -2.4 |
| Construction | 2.9 |
| Goods-producing industries | 2.1 |
| Wholesale trade | 6.1 |
| Retail trade and accommodation | 4.9 |
| Transport, postal, and warehousing | -28.1 |
| Information media and telecommunications | 3.4 |
| Financial and insurance services | -0.3 |
| Rental, hiring, and real estate services | 3.6 |
| Prof, scientific, technical, admin, and support | 0.0 |
| Public administration and safety | 4.8 |
| Education and training | -1.7 |
| Health care and social assistance | 7.0 |
| Arts, recreation, and other services | -0.6 |
| Service industries | 0.8 |
| Gross domestic product | 0.8 |
More data
Use Infoshare to access the national accounts time series.
Subject category: Economic indicators
Group: National accounts – SNA 2008
Structure of the economy
Here are some links showing the contribution to the New Zealand economy of different industries.
The gross domestic product data visualisation product is no longer produced, due to the closure of the Stats NZ archive website. ‘Gross domestic product: March 2021 quarter – visualisation CSV’ under Download data contains the underlying data previously used to produce this visualisation.
An interactive tool, Which industries contributed to New Zealand’s GDP, visually shows how the composition of industries contributing to New Zealand’s economy has changed through the years using national accounts data.
The tourism satellite account provides a picture of the role tourism plays in New Zealand, with information on the changing levels and impact of tourism activity.
Definitions and metadata
National accounts quarterlies – DataInfo+ provides the general methodology used to produce these statistics.
National accounts quarterlies – concepts – DataInfo+ provides the definitions of terms used in this release.
Gross domestic product: March 2021 quarter – changes and revisions – DataInfo+ has details of revisions for this release.
Impact of seasonal adjustment methods on interpreting contributions to change in March 2021 quarter
The use of multiplicative seasonal adjustment through periods of dramatic changes can lead to differences between the seasonally adjusted contribution to change in a component, and its effective impact on higher level aggregates.
In particular, the seasonally adjusted contribution to change of exports of services understate their contribution to aggregate seasonally adjusted GDP(E) movements, from September 2020 quarter onwards.
March 2021 quarter gross domestic product and COVID-19 has more detail about the use of multiplicative adjustment.
A different effect is observed in unallocated taxes, whose seasonally adjusted movement in the March 2021 quarter somewhat overstates their effective contribution to GDP growth. See [link to changes and revisions] for more information.
Aggregate GDP and aggregate GDP(E) are both directly seasonally adjusted and as a result they incorporate the true seasonally adjusted contribution of their respective components. That is, there is no understatement or overstatement at the aggregate level.
Text alternative for Gross domestic product, industry growth and contribution to growth, March 2021 quarter
Image shows the share of the economy, and contribution to growth in the March 2021 quarter for the primary, goods-producing, and services industries. A column chart shows that primary industries rose 0.3 percent, goods-producing industries rose 2.4 percent, and service industries increased 1.1 percent. A pie chart shows that service industries make up about two-thirds of GDP, goods-producing industries about one-fifth, and primary industries about one-twentieth. A bar chart shows industry contribution to the GDP growth rate: primary industries were flat, goods-producing contributed 0.5 percent, and services contributed 0.7 percent.
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ISSN 1178-0290
Next release
Gross domestic product: June 2021 quarter will be released on 16 September 2021.
