While the election campaign to date has largely been a war of words, the primary focus turned briefly to numbers yesterday as details on how the New Zealand economy is doing were released.
In something of a surprise to even the most casual observer, the economy grew 0.9 per cent in the second quarter, lifting the country out of recession and exceeding the expectations of amateurs and professionals alike.
In fact, based on revisions to earlier numbers, the economy, we were told, may not have been in a technical recession at all. Whenever the word ‘technical’ pops up in a report from a government department, one can confidently expect that what little understanding one may have had from the first lot of statistics is about to be crushed by another longer, more complicated set of statistics.
Nonetheless, gross domestic product rose 3.2 per cent. New Zealand has an awfully long history of below-average GDP figures, compared to our Western economy peers, in part because of our equally long love affair with property investment. Buying an investment house and waiting for the price to go up does next to nothing for our GDP. Before we get too excited about the latest number, it would be wise to wait and see if it is in fact part of a longer trend, which would undoubtedly be something to crow about.
Interestingly, strong net migration provided a boost, as did better-than-expected performances from sectors such as manufacturing, which turned around five consecutive quarters of decline.
Importantly for Wairarapa, higher dairy, forestry, and meat exports helped drive the growth. More about that shortly.
Naturally, given the rather bleak winter we have all just put up with, it is tempting to take a more optimistic spring-induced outlook on the back of these numbers and book in something along the same lines for the next period. Hold your horses.
Many economists expect rising interest rates and low export prices could lead us right back into recession later this year, or in early 2024. Bugger. For that matter, some say the New Zealand economy will grow slowly over the next 12 to 18 months.
However, on what I believe to be a genuinely positive note and a portent of things to come, other performance-based results will hopefully be viewed as a welcome fillip for the rural sector.
Co-operative dairy giant Fonterra posted annual net profits up by a whopping 170 per cent to $1.6 billion, driven by strong margins in its cheese and protein products.
Excluding a one-off net gain of $248m, the co-op’s after-tax profit was $1.329b, up $738m compared with the same time last year, and comfortably ahead of market expectations.
For those trying to keep their heads above water in the hope that better times are ahead, the full-year dividend came to 50 cents a share, compared with last year’s total of 20c. Fonterra also paid a special dividend of 50c from the proceeds of the sale of a subsidiary in Chile. It all helps.
Fonterra said there are indications that higher demand for New Zealand milk powder will start to return early next year. It can’t come soon enough.