18 Feb 2024
Today’s GDP figures to June do not factor in the impact of the current Covid lockdown, National Shadow Treasurer Andrew Bayly says.
“Today’s figures show that, prior to the current lockdown, New Zealand’s economy continued to grow despite the constraints of Covid.
“While 5.1 per cent annual GDP growth is strong, it’s important to remember the thief in our wallets, inflation, is also running at 3.3 per cent.
“There were strong signs that, prior to the lockdown, the economy was hitting capacity constraints and becoming overheated. Inflation had risen to a 10-year high, businesses were unable to find staff and the Reserve Bank expected to raise interest rates the day after our first case was discovered.
“Now we also have our largest city in a lengthy shutdown, exacerbating capacity constraints.
“This economic growth also came at high cost. Grant Robertson and the Reserve Bank had collectively fired almost every shot they had, reducing the Official Cash Rate to 0.25 per cent, borrowing heavily to almost double debt in just 18 months and burning through almost all of the Covid Response Fund.
“Grant Robertson now needs to come cap-in-hand to Parliament for more money to get us through this outbreak. The risk is the debt-fuelled recovery continues to push up inflation, increasing the cost of living for Kiwi households and putting pressure on the Reserve Bank to increase mortgage rates.
“It didn’t have to be this way. The current lockdown would have been much shorter if we had ramped up vaccinations in April like other developed countries, instead of August, once we already had an outbreak.
“Now we are here and it’s inevitable Mr Robertson will need to borrow more money to address the crisis. First on the list should be rolling out National’s rental support scheme to help businesses struggling under Covid restrictions.
“Today’s numbers look good on the surface, but they hide an economy where the cost of living is rising and borrowing is increasing.”