This week’s Friday Graph uses Statistics New Zealand’s newly-released estimates for real GDP for the December quarter 2011 to show how weak real GDP growth has been since around 2005.
Real GDP was 1.4 percent higher in the 2011 calendar year than in 2010 and real GDP per capita was 0.6 percent higher.
This represents a much weaker two-year recovery from the 2009 downturn than after each of the 1991 and 1998 downturns. (Real GDP rose by 5.2 percent in 1993 and by 3.9 percent in 2000.)
Given the debate around the world currently about the effects of budget tightening on economic activity, in looking at this chart it is useful to bear in mind that the strong recovery after 1991 contradicted the expectations of 15 economists at the University of Auckland who wrote a public letter in June 1991 declaring “in the strongest possible terms” that the June 1991 budget cuts were “fatally flawed” and could “only depress the economy further”.
The chart also shows a poor growth performance generally since 2005, compared to the post-1991 period as a whole. This is consistent with the slowdown in productivity growth that was the topic of last week’s Friday graph.