New Zealand’s economy shrank by 1% over the first quarter of the year and 1`% for the year – the largest annual drop since march 1992, when the economy contracted 1.3%, according to GDP figures released by Statistics New Zealand this morning.
The slump in manufacturing was the main cause – activity declined 7.2% for the quarter and 5.4% for the year.
Construction, which has been in the doldrums for over a year, showed a minor increase of 0.4%.
Household spending also declined by 1.4% - the largest quarterly decline since June 1991, mostly due to a fall in purchases of major appliances and vehicles. National disposable income also dropped 0.8% for the year.
Food beverage and tobacco manufacturing shrank 4.8%, machinery and equipment shrank by 11.9% and metal products fell 16%.
Primary industry activity was flat, with all sectors recording either a nil increase in activity or a small contraction. That follows a 0.8% increase in the December 2008 quarter and a 5% increase the previous year.
Service industries activity showed a minor contraction of 0.1% for the quarter, mostly due to a 4.5% decrease in transport and communications activity.
The main contributor to this was a cutback in demand for postal and courier services. There was also a drop of 3.8% in wholesale trade.
The only significant increase was in finance insurance and businesses services (up 2.3%).
The figures also showed the seventh quarter of decline for residential building.