Source: EMA
The Employers and Manufacturers Association (EMA) says the 0.9% contraction in GDP for the June quarter is a reminder of the fragility of business confidence and the ongoing drag in building economic momentum.
“This result is a knock at the wrong time,” says Alan McDonald, Head of Advocacy and Strategy at the EMA. “Even though the data reflects the June quarter, and we’re now seeing signs of improvement, it still sends a negative signal to businesses that are already cautious about investing and hiring.”
McDonald says the lag in GDP data means it doesn’t fully reflect the current sentiment, which is slowly turning more positive. “We know from our exporters and primary producers that things are picking up, but there’s a two-speed economy. Sectors such as construction and services in the main cities are still struggling, and confidence remains delicate.”
While the June quarter figures are disappointing, they must be viewed in the context of a broader economic landscape that is beginning to show signs of life.
In addition to economic indicators, a range of legislative reforms are also beginning to take shape. Key developments such as changes to the Resource Management Act (RMA), infrastructure planning, immigration settings, employment law and the review of vocational education and training are all in motion. While these reforms take time to implement, they represent important steps toward improving the business environment and supporting long-term growth.
The EMA says it’s critical that government continues to do all it can to accelerate the commencement of infrastructure projects that have already been announced and perhaps sequences those projects to prioritise regions facing economic pressure.
“Let’s get moving on the school and hospital upgrades announced in the May Budget,” says McDonald.
“Targeting areas like South Auckland, where growth is slower, would help restore confidence and create momentum. It’s not about spending more, it’s about spending smarter.”
Accelerating infrastructure projects stimulates economic activity and sends a strong signal to businesses about supporting recovery. The recent announcement of a funding boost for major events and tourism is also a welcome shot in the arm.
“Despite the knock, there are signs of movement. We just need to make sure we continue to build more momentum,” says McDonald.
