Two rays of sunshine have just burst through the economic clouds. First, new figures showing the economy is growing much faster than anyone expected.
GDP rose by 1.1 percent in the first quarter of the year, that’s more than double Treasury forecast.
And more movement on petrol prices is offering an even better prospect.
With a brand new East Tamaki plant making infant formula for the Chinese, GMP Pharmaceuticals is one of those companies helping manufacture New Zealand’s higher than expected growth.
“What we are doing, we are adding value to New Zealand dairy ingredients,” says GMP general manager Minesh Patel.
GMP started with seven employees nine years ago. It now has 250 staff making pharmaceuticals for 20 Asian markets. Off the back of the dairy industry’s success, GMP’s exports have doubled in a year and turnover is up to $100 million.
“So far New Zealand is exporting only commodities, but now is the time to do some kind of innovative products, value-added products, that’s what we are doing,” says Mr Patel.
New Zealand’s improved performance can be put down to factors such as better milk production, a higher livestock slaughter and growth in professional and Government services.
Adding to the feel-good factor in the next quarter will be the 10 percent drop in petrol prices, putting a shiny new car on more wish lists.
If householders aren’t yet looking at new SUVs, Giltrap City Toyota CEO Graham McMullan says businesses certainly are.
“We’re seeing a good number of businesses coming to us, they’re looking to upgrade their fleet, they’re looking at additional vehicles. And obviously there’s a lot more confidence out there in the marketplace.”
But economists warn that the outlook is still volatile.
“We’re in a global environment that is a lot more uncertain, particularly in Europe, so we do have a few speed bumps potentially along the way,” says ASB chief economist Nick Tuffley.
Mr Tuffley says events in Europe could slow New Zealand’s growth but he says the country looks on track for the gradual recovery to continue.
