Hydro output halts decline in economy

Press, 19 April 1989, Page 37

Hydro output halts decline in economy

By

PATTRICK SMELLIE

in Wellington

Low levels of oil exploration and high water levels in hydro-electric lakes stopped New Zealand’s economy contracting further in the last three months of last year.

The inflation-adjusted gross domestic product figures for the December, 1988 quarter showed a small gain of 0.2 per cent.

On an annual basis, the total size of the economy fell by 1% in real terms. The areas of real increase in economic activity were cattle production, food processing, clothing and textile manufacturing, house building, and improved export trade, along with improvements in the finance, real estate, and communications sectors.

Offsetting these were declines in lamb, milkfat, and wool, paper products, chemical and petrol products, and machinery, commercial building, and transport. Most dramatic was the

9.6 per cent increase in the electricity, gas and water sector. But this was largely because of higher hydro lake levels, meaning

lower levels of thermal electricity generation. This assisted the GDP figures by producing more outputs for less costly inputs. Total power generation was also up for the quarter. A downturn in oil exploration also gave a 2.8% increase to the fishing, forestry, and mining category. Oil exploration is

counted as a negative influence on GDP since it is deemed not to be pro : ducing anything. Trade, restaurant and hotels showed a 3.2 per cent increase because of buoyant exports and

stronger demand for retailers and . wholesalers ahead of Christmas.

The two powerhouses of economic growth, agriculture and manufacturing, showed falls.

Agricultural production fell by 2.4% over the quarter and was 2.4% down on the corresponding quarter of 1987. Manufacturing output was down 1% on the September 1988 quarter, but showed a 5.6% fall over the year. The Opposition spokeswoman on finance, Miss Ruth Richardson, said the figures showed the Government needed to adopt a strategy for growth. “This is a dismal performance for the New Zealand economy,” she said.