Grant Robertson: GDP result shows economic turbulence will be here for a while
New Zealand’s economy will continue to be volatile for some time but it is travelling in the right direction, Deputy Prime Minister Grant Robertson says.
Speaking to Mike Hosking on Newstalk ZB this morning Robertson said he had been heartened by the market reaction to yesterday’s GDP figures which showed the economy went backwards by 1 per cent in the December quarter.
“Most people have recognised it for what it is, that the overall momentum in the New Zealand economy is still there but we are going to see a bit of turbulence.
“We have still had a good recovery but we obviously have to recognise that Covid is still around causing disruptions in things like supply chain and elsewhere that will take some toll. I still think the direction of travel is the right one.”
Robertson wouldn’t be drawn on predictions by some economists that New Zealand is already in a second recession.
“I’m not going to make a prediction on that because there is so much volatility but obviously if we look back at coming out of the global financial crisis we actually did see a double-dip.”
Robertson said normally the first quarter of the year which ends on March 31 saw a lot of international tourists visiting New Zealand.
“We haven’t had them this time around. On the flipside of that, we have got strong construction activity still going on there are other sectors that are doing ok. We will wait and see but we are coming off the back of a significant hit on the global economy.”
He said relative to the rest of the world New Zealand was still standing up well.
“But we aren’t and I have never pretended this would be a linear piece of travel for the country. It is going to bounce around a bit, that is what we are experiencing now.”
Westpac economists have predicted the second quarter of this year will also see New Zealand’s economy go backwards.
Robertson said there were a variety of predictions for the economy from the bank economists.
“If you look at the predictions made for this quarter they were both wide-ranging and not necessarily accurate. That is the nature of the situation we are in now.
“I still think and I think the commentators are all agreeing we have done well, there is a turbulent period that we are going through we have got investments rolling out through things like infrastructure and construction. We are seeing strong levels of confidence among retailers and so on but it is bumpy. It is just the reality of the Covid world we are living in.”
While New Zealand’s economy went backwards in the fourth quarter Australia’s GDP rose 3.1 per cent.
Robertson said it was not a competition and both countries had been ahead or behind of each other at various stages over the last year.
“You can look at it different ways both countries are doing well and that is actually good for our economy.”
Robertson said a transtasman travel bubble between the countries would help but would not be a silver bullet.
“It would help boost confidence in sectors that have been struggling and are struggling. It would also allow a lot of people to reunite with their families which I think is something that would be welcomed.”
But he wouldn’t be drawn on a date. “We are getting there, we are close. I think the prime minister’s word was soon and I would back that.”
Robertson said the Government was operating in a different situation than pre-Christmas when there was talk of the travel bubble opening by the end of the first quarter.
“We have been working very hard to come up with an arrangement that was a set of shared protocols and frameworks and understandings so there was one framework in place. The Aussies took a different approach on that.
“We have recalibrated, we are going to be able to deal with this. But it isn’t as easy as it might appear on the surface. Australia deals with one country. New Zealand has to deal with a number of different states who have slightly different rules for the way they go about managing the pandemic it just takes a little bit longer to organise it.”
Robertson said the Government had to do what was in the best interests of New Zealanders and people had to be realistic.
“f these bubbles are going to be turned on and off and that would be Australia doing that to us or New Zealand doing that to Australia they night find themselves stranded. That is going to be highly inconvenient to them but we also have to work out what we do in that situation to protect public health and to support people.There are always things to work through here but I am optimistic this will happen soon.”
But Robertson was coy on what further support the Government would be providing the tourism sector. Tourism minister Stuart Nash is set to make a speech in Otago this morning.
“I will leave him to make his speech but we are working very closely with the tourism sector to provide the support that is needed in the areas and regions that it is needed. He is working through a programme which I think is going to be really helpful.”
The Government has already put up a $400 million package for the tourism sector and paid out $1.8 billion in the wage subsidy but Robertson indicated it wasn’t about to give another handout to the sector.
“I don’t want to indicate there is money being put out there today or anything like that. But we are well on our way to agreeing the next steps in the support we give to tourism.”
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