Stats NZ

GDP climbs 1.6 percent in March 2021 quarter following December dip

Gross domestic product (GDP) rose by 1.6 percent in the March 2021 quarter, following a 1.0 percent fall in the December 2020 quarter, Stats NZ said today.

"After an easing of economic activity in the December quarter, we’ve seen broad-based growth in the first quarter of 2021. This is despite Auckland being in alert level 3 lockdown for 10 days, and continued border restrictions," national accounts senior manager Paul Pascoe said.

The services industries, which represent about two thirds of New Zealand's economy, made the largest contribution to the result.

"Households spent more on accommodation, eating out, and purchasing big ticket items such as furniture, audio visual equipment, and motor vehicles. This helped support the growth in retail trade and accommodation industry and wholesale trade industry," Mr Pascoe said.

See Retail trade survey: March 2021 quarter and Business financial data: March 2021 quarter.

"The growth in wholesale trade also reflected higher activity in machinery and equipment wholesaling, and motor vehicle wholesaling. Corresponding growth was seen in investment on plant and machinery, and transport equipment, and associated imports of these items."

Higher activity was also seen in the business services, health care and social assistance, and information media and telecommunications industries in the March 2021 quarter.

The volume of taxes on production are included in the valuation of GDP and also contributed to growth, with a rise of 7.2 percent. This was mostly driven by an increase in the volume of import duties for items such as tobacco, electrical goods, and motor vehicles.

Construction rebounded 6.6 percent after a fall of 8.4 percent in the December 2020 quarter. Construction services, heavy and civil engineering construction, and residential building construction all contributed strongly. The construction industry has returned to near record levels of activity with historically high volumes of residential building work contributing to overall activity.

Building activity grows has more information.

The March quarter is traditionally the peak season for international tourism and arrival of international students in New Zealand. The impact of border restrictions is reflected in the continued decline in exports of services, which are down 20.2 percent in the quarter and 48.7 percent through the year to March 2021. A travel bubble with Australia has been in place from 19 April 2021, the effects of which will be reflected in the forthcoming release of Gross domestic product: June 2021 quarter.

Annual GDP down 2.3 percent

While GDP rose in the March 2021 quarter, on an average annual basis, GDP fell 2.3 percent in the year ended March 2021. Several industries have fallen on an annual basis, declines that can be largely attributed to the effects of the alert level 4 lockdown in June 2020 quarter, and continued COVID-19 related disruptions such as the border restrictions and changing alert levels in the quarter.

The annual decline in GDP reflects the four quarters to March 2021 compared with the four quarters to March 2020.

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