21 Sep 2017

Sporting events drive economic growth

3:08 pm on 21 September 2017

Strong exports and solid retail spending from big sporting events have driven economic growth in the second quarter.

Lions supporters were out in force in Dunedin ahead of the game tonight.

British and Irish Lions Rugby fans were out in full force through the month of June. Photo: RNZ / Ian Telfer

Official figures show gross domestic product rose a seasonally adjusted 0.8 percent in the three months ended June, which is broadly in line with expectations.

The annual growth rate stayed steady at 2.5 percent.

The strongest contribution to growth came from exports, reflecting the rebound in the dairy and meat sectors, while the British and Irish Lions Rugby tour and World Masters Games helped to boost spending in shops, and the hospitality sector.

The building sector eased back for a second quarter, pointing to problems such as the lack of skilled workers and delays in projects.

However, economic growth per head of population rose 0.3 percent from no change in the previous quarter.

Analysts said economic growth was solid enough, but the latest numbers might be as good as it gets.

"It is clear that the economy is not quite firing on all cylinders as it grapples with some meaningful headwinds including late-cycle capacity pressures, a turn in the credit cycle and housing market weakness," said ANZ chief economist Cameron Bagrie.

He said the data also showed how weak New Zealand's productivity was, which would constrain future growth.

Mr Bagrie said it was likely that the construction sector would remain soft and that - along with any election uncertainty - might also weigh on growth.

The numbers also offered no reason for the Reserve Bank to change its policy of holding interest rates steady for an extended period.

The Green Party said the latest GDP figures showed construction was going backwards - something that should not be happening during a housing crisis.

Leader James Shaw said GDP was not a measure of the health or wellbeing of the economy - just a statement of activity in the country.

He said below the surface there were major issues in construction.

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