KEY QUOTE

“Our economic growth, on an average, per year, economic growth basis, was actually better than the previous Government. But I acknowledge that under Labour Government, business sentiment is not always been as positive as it has been under National Government. That’s a long stranding thing. It doesn’t actually reflect what the economy is doing. It reflects sentiment.
– Chris Hipkins, Tuesday 8^th August, Mike Hosking Breakfast, Newstalk ZB, 2:07

THE FACTS

• Both Real GDP per Capita and Real GDP, grew faster under the previous National-led Government than the current Labour-led Government.
• Chris Hipkins’s statement is incorrect.
• The Bolger/Shipley National-led Government also outperformed the Helen Clark Labour-led Government that followed it, in terms of GDP per Capita (the fairer comparison metric since it adjusts for that Government’s immigration settings.)

KEY QUESTIONS

1. Was the Prime Minister’s incorrect statement:
   1. Misinformation (incorrect, a mistake)
   2. Disinformation (incorrect, a lie)
   3. Malinformation (correct data used in a misleading way)
   4. Or is it us that has made a mistake (misinformation) and owe him an apology?
2. Can we determine from this data that National-led Governments outperform Labour-led Governments on economic growth?
3. Is there a trend that outgoing National Governments hand on economies in growth, and Labour Governments hand on economies in decline?
4. Did we handle Covid well, from an economic perspective?
5. Why do some politicians and media lead only with total GDP headlines, and not also share the GDP Per Capita measure, given the population increases?

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HAVE YOUR SAY

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FULL DATA ANALYSIS
Please contact us if you would like the full data set and research.

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NOTES:

• We have shared all publicly available information, and asked Stats NZ if there is a way to calculate earlier figures.
  • GDP data started in 1987 Q2.
  • GDP per capita data started in 1991 Q1 because the quarterly mean population statistics series that Stats NZ uses only started in 1991.
• There are many variables that impact an economy, of course, e.g. the 1987 sharemarket crash, the GFC, and Covid.
• We consider quarters that contain elections and Government formation negotiations to be neutral and have not counted these in the calculations as neither major party is in single control over those periods.
• Nominal GDP is rarely reported as it doesn’t take inflation or population changes into account so it is a misleading measure of economic growth. As such, we have not shown it in the table or graph above.
• Real GDP adjusts for inflation and seasonality, but doesn’t take population changes into account. Stats NZ, politicians, economists, and media mostly lead with Real GDP per quarter, but often just call this ‘GDP’. Because the term ‘Real’ is often omitted, this is confusing many Kiwis, politicians, and media outlets who sometimes think this number needs to be adjusted down for inflation. There are also two approaches to calculating this figure (production approach and expenditure approach), and this isn’t always explained very well either, adding to the confusion. The production approach is used for both the headline GDP measure and also Real GDP Per Capita.
• Real GDP Per Capita adjusts for all three of inflation, seasonality, and population changes. This uses the production approach.
• Stats NZ explanations of GDP:
  • “Gross domestic product (GDP) is New Zealand’s official measure of economic growth. It helps a range of data users, including policy makers, understand and manage the New Zealand economy.”
  • “We use the production and expenditure approaches to calculate New Zealand’s GDP.”
  • “The production approach to GDP measures the total value of goods and services produced in New Zealand, after deducting the cost of goods and services used in the production process. This is also known as the value-added approach.”
  • “The expenditure approach to GDP (also known as gross domestic expenditure or GDE) measures the final purchases of goods and services produced in New Zealand. Exports are added to domestic consumption, as they represent goods and services produced in New Zealand. Imports are subtracted, as they represent goods and services produced by other economies.”
• Additional Stats NZ explanations:
  • “We don’t reconcile the two measures [production and expenditure] on a quarterly basis. We measure them separately and publish both. The production approach is used as the headline measure. As per our Sources and Methods:
    Conceptually, both the production-based and expenditure-based GDP series should produce the same growth rates, because what is produced by an economy should equal what is used. However, as each series uses independent data and estimation techniques, some differences between the alternative measures arise. The expenditure-based series has historically shown more quarterly volatility and is more likely to be subject to timing and valuation problems. For these reasons, the production-based measure is the preferred measure for quarter-on-quarter and annual changes. For the quarterly measure, the headline GDP production series is also seasonally adjusted.”
  • “GDP in 2009/10 prices is the production approach. Current price (nominal) GDP per capita uses the expenditure approach as we do not produce the production approach in current prices on a quarterly basis due to data limitations.”
  • “Annual growth rates are calculated as year-on-year, so often do not reflect the sum of quarterly growth rates. Annual values are calculated as the sum of actual (not seasonally adjusted) quarters.”
  • “[For the seasonally adjusted calculation] We use X-13ARIMA-SEATS which is produced, distributed, and maintained by the US Census Bureau.”
  • “Current price GDP is an interchangeable term for nominal GDP.”
  •  “Chain-volume is equivalent to real, and is a more technically accurate description of the methods we use to aggregate volume series.”
  • “GDP (rather than per capita) is the favoured headline figure internationally, and by our own expert users. We also produce per-capita measures for users who prefer to use these.”
  • “GNP is no longer measured. GDP is the favoured measure internationally and the more pragmatic figure to measure. We do still produce an annual measure of Gross National Income (GNI), which can be found in table 1.2 of the consolidated accounts table here:
    https://www.stats.govt.nz/information-releases/national-accounts-income-and-expenditure-year-ended-march-2022/”
• Q&A with Stats NZ in June 2023:
  • Q. Why does Stats NZ lead with GDP and not GDP per capita?
    A: “Stats NZ reports GDP as our primary statistic which is in line with standard international practices followed by national statistical offices around the world.”
  • Q. Would you consider making GDP per capita more prominent in your future releases?
    A: “As a politically neutral organisation we have an obligation to remain consistent and impartial in our reporting over time. This is vital for retaining public trust in the data we publish. Changing the emphasis of our reporting, or suggesting that media outlets do so, would call into question this impartiality, especially were we to increase the focus on alternative measures at a time when they are unusually strong or weak.”
  • Q.What else can Stats NZ can do to make sure that politicians and media outlets also mention GDP per capita with sufficient weighting?
    A. “We do not interfere with or attempt to influence the way our statistics are reported externally (with the exception that we may request that media correct reporting that is substantially inaccurate). Media and politicians are free to focus on per capita statistics, if they wish.”
• Stats NZ does not have a GDP metric that adjusts for Government stimulus, e.g. debt and printing of money.
• We have not included Real GNDI (Gross National Disposable Income) Per Capita in this analysis as that is an insight for another day. The focus on this fact is to highlight the difference between Real GDP and Real GDP Per Capita.
• All numbers are provisional and subject to revision.

Thank you to the Factors who helped pull this together.

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SOURCES:

• GDP per Capita = www.infoshare.stats.govt.nz > Browse > Economic Indicators > National Accounts – SNA 2008 – SNE > Series, Per capita measure, Chain volume, Seasonally adjusted, Total (Qrtly-Mar/Jun/Se/Dec)
• GDP = www.infoshare.stats.govt.nz > Browse > Economic Indicators > National Accounts – SNA 2008 – SNE > Series, GDP I, Chain volume, Seasonally adjusted, Total, (Qrtly-Mar/Jun/Se/Dec)

This work is based on/includes Stats NZ’s data which are licensed by Stats NZ for reuse under the Creative Commons Attribution 4.0 International licence.

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