Lucy Craymer

WELLINGTON (Reuters – New Zealand’s GDP (gross domestic product) grew in the last quarter of 2021 after it emerged from COVID-19 lockdowns. The data also supported economists’ expectations that the central banks would increase interest rates.

Stats NZ announced Thursday that the production-based output rose by 3.0% for the quarter. It was slightly below the 3.2% growth that economists expected, but a significant turnaround after the 3.6% decline in activity during September’s lockdowns.

The December quarter growth forecast by the Reserve Bank of New Zealand was 2.3%, according to last month’s prediction of the RBNZ.

According to an ANZ report, “Q4 GDP data indicate a strong, albeit highly stimulated economy.”

They said that while there was uncertainty about the future, the most important concern was New Zealand’s rising inflation. This would make it necessary for the RBNZ not to tighten its policies further.

An increase of 3.1% was recorded in the annual GDP, slightly below the forecast by Reuters for a rise of 3.3%.

Three times has the RBNZ increased interest rates since October.

Capital Economics economist Ben Udy stated in a note that “Given the Q4 rebound in activity was higher than the RBNZ’s expectations, today’s data will continue the Bank on it hiking path.”

OMICRON OUTBREAK

New Zealand’s most populous city, Auckland was released from the long lockdown in which it had been locked down for several quarters. It had hit manufacturing, retail and construction as well as recreational activities. Economic growth improved. In the third quarter, other parts of the country experienced less severe lockdowns.

Fourth quarter consumer spending and government spending was strong, along with business investment. Trade was however a problem as imports increased, data revealed. Stocks were also an issue as many companies reduced stock to meet the demand.

New Zealand is again being affected by a major outbreak of Omicron-related coronavirus infection.

Although restrictions are not in place, increasing numbers of patients and hospitalisations has tempered the desire to travel while isolation and sickness are affecting some sectors.