Mixed economic news – tax package will help

A fifth successive quarter of economic growth is another sign the recovery is continuing – and the Government’s tax package next week will further help the economy in the long-term, Finance Minister Bill English says.

“GDP figures today show the economy is continuing to recover – although it remains clear that this recovery will be bumpy at times.

“The latest quarterly growth was below expectations, but it reflects the patchy nature of this recovery. Total domestic spending fell slightly. By contrast, export volumes have increased 7 per cent from their lows of 2008 and they had their second strongest quarter on record.

“This trend towards saving and exporting more, and spending and borrowing less, is what New Zealand needs to build stronger long-term growth.”

This adjustment will be helped by the tax package on 1 October – including across-the-board personal tax cuts, Mr English says.

“The tax changes will boost New Zealand’s longer-term growth prospects by tilting the economy towards savings, investment and exports and away from borrowing, housing speculation and consumption.

“This is the next step in the Government’s programme to achieve faster growth and support sustainable, higher-paying jobs. In addition, the personal tax cuts-GST switch will leave the vast majority of Kiwis better off.”

Statistics New Zealand GDP data issued today shows the economy grew by 0.2 per cent in the June quarter. This took annual real GDP growth to 1.9 per cent – its highest level for two years.

“Looking ahead, I expect some volatility in the next few quarters of GDP data. The Canterbury earthquake and uncertainties about the global outlook will no doubt impact on New Zealand’s immediate economic performance.

"This reinforces the need for the Government to press on with its comprehensive plan for turning around the economy.”

ENDS

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