Economy grows strongly despite earthquake

Economic activity, as measured by gross domestic product (GDP), rose 0.8 percent in the March 2011 quarter, Statistics New Zealand said today. This follows a 0.5 percent increase in economic activity in the December 2010 quarter.

"The strong growth in the latest quarter despite the 22 February earthquake, was mainly due to manufacturing," national accounts manager Rachael Milicich said. "While some businesses in Christchurch were adversely affected, the vast majority were able to continue operating, and the earthquake resulted in some activity that would not normally have taken place."

By industry, the significant movements in the March 2011 quarter were in:

• manufacturing, up 3.6 percent, with large increases in machinery, metal product, and food and beverage manufacturing
• real estate and business services category, up 1.0 percent due to increases in business services
• wholesale trade, up 1.5 percent – the sixth consecutive increase 
• construction activity, down 4.3 percent due to decreases in residential and non-residential building.

The expenditure measure of GDP rose 0.6 percent in the March 2011 quarter. The production measure of GDP (up 0.8 percent) is less volatile and is the preferred measure.

GDP increased 1.5 percent in the year ended March 2011, while the expenditure measure rose 1.8 percent.

Notable movements in the expenditure measure of GDP in the March 2011 quarter were:

• the volume of spending by New Zealand households (up 0.4 percent), mainly due to an increase in durable goods (such as furniture and appliances)
• government expenditure (up 1.2 percent), with increases in central and local government partly due to the 22 February earthquake
• investment in fixed assets (down 1.3 percent), with the largest fall being in non-residential building.

Additional information for the March 2011 quarter GDP was collected from nearly 800 Canterbury businesses. This data was used to calculate the value of stock losses from the 22 February earthquake. Statistics NZ would like to thank these respondents. For more information, see Impact of the Canterbury earthquakes on New Zealand's gross domestic product.