Two weeks ago, New Zealand thrashed Australia in the rugby.
Now, this country has overtaken Australia in the economic growth stakes.
The New Zealand economy is worth more than $250billion for the first time and Finance Minister Bill English is claiming most of the credit for one of the strongest economies in the developed world.
Statistics New Zealand reported yesterday gross domestic product (GDP) grew by 0.9% in the three months to June 30, taking annual growth to 3.6.%.
Mr English said New Zealand’s growth rate was in the top three among developed economies.
"Despite the tough period the dairy industry has been through, we are in the unusual position of enjoying solid growth, rising employment and real wages at the same time as very low inflation."
New Zealand’s growth rate was more than double the OECD rate of 1.6% and compared with 3.3% in Australia, 2.2% in the United Kingdom, 1.2% in the United States and 0.8% in Japan.
The result was solid and the outlook "relatively positive" but there were many risks around why the Government could not afford to take New Zealand’s current economic performance for granted.
That was why the Government was continuing to focus on building a stronger, more resilient economy, he said.
The quarterly growth rate was slower than the 1.1% expansion predicted in a Reuters poll of economists but ahead of the Reserve Bank’s pick of 0.8%.
Construction grew 5% in the quarter, as both residential and commercial activity expanded to meet the level of work required.
That spilled over into other sectors.
The demand for building products helped drive a 0.8% expansion in manufacturing and the housing boom supported 1.3% growth in rental, hiring and real estate services.
Statistic NZ national senior accounts manager Gary Dunnet said in a statement 11 of the 16 industries were up in the quarter and construction once again provided a boost to production.
ASB chief economist Nick Tuffley had expected quarterly growth to come in at 1.2% and annual growth to be 3.7%.
Yesterday, he said annual growth was still materially higher than the Reserve Bank believed at the August Monetary Policy Statement.
"On balance, this may create some reluctance from the Reserve Bank to cut the OCR below 1.75% next year, after delivering one more cut in November. Nonetheless, in light of continued weak inflation, and despite strong growth, we continue to see a high chance of a further cut next year."
Looking at the detail of the release, Mr Tuffley said much of the increase in dairy exports was met from existing inventories and he expected dairy production to contract in the current season.
The lift in the dollar’s value would not help other exporters in the future.
Compared to ASB expectations, the weaker second-quarter result was due to some industries making smaller positive contributions to growth than earlier indications had suggested, he said.
They included the manufacturing, retail, transport, wholesale and finance sectors.
"This did surprise us, as many of these industries are also benefiting from strong export volumes, housing demand and construction activity."
Mining activity fell, versus expectations of a solid increase.
The surge in oil exports in the quarter suggested a recovery in the mining sector after two weak quarters, Mr Tuffley said.
Another surprising outcome in the national accounts was a reported 1.7% fall in tourism spending.
The recent strength of the New Zealand dollar would be eroding some purchasing power of overseas visitors.
However, Mr Tuffley suspected Statistics NZ had attributed too much of the lift in retail spending to domestic consumption, something he questioned given the relatively average level of consumer confidence.
"Overall, we believe the underlying momentum in New Zealand growth lifted firmly over the first-half of 2016 and could even be stronger than the second-quarter GDP figures suggest. In particular, the lift in per capita growth is a very positive development."
