KEY INSIGHTS

• Nominal GDP is rarely reported as it doesn’t take inflation or population changes into account so 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 but doesn’t take population growth or shrinkage 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 too 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. See NOTES at the bottom of this page for more information.
• Real GDP Per Capita adjusts for both inflation and population changes. This uses the production approach.
• Over the 31.5 years of data shown, and due to New Zealand’s population growth, Real GDP % growth figures have averaged 1.76x more each quarter than Real GDP Per Capita growth (99.8% cumulative quarterly growth / 56.7%).

KEY QUESTIONS

Should we be leading GDP conversations with:

1. Real GDP or Real GDP Per Capita?
2. Quarterly GDP growth or Annual GDP growth?

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Full data analysis
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Notes:

• Quarterly Real GDP Per Capita growth rate data was not available before June 1991 (for June vs March 1991). This is why we used March 1991 as the base quarter.
• 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/”
• 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 Nominal GDP, 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:

• https://www.stats.govt.nz/information-releases/gross-domestic-product-september-2022-quarter/ and then https://www.stats.govt.nz/assets/Uploads/Gross-domestic-product/Gross-domestic-product-September-2022-quarter/Download-data/gross-domestic-product-September-2022-quarter.xlsx
  • Table 4 = Real GDP quarterly % changes (production approach, seasonally adjusted)
  • Table 6 = Real GDP annual % changes (production approach, actual)
  • Table 10 = Real GDP annual % changes (expenditure approach, actual)
  • Table 21 = Real GDP Per Capita quarterly % changes (expenditure approach, seasonally adjusted)
  • Table 22 = Real GDP Per Capita annual % changes (expenditure approach, actual)
• https://www.stats.govt.nz/information-releases/gross-domestic-product-september-2022-quarter/ and then https://www.stats.govt.nz/assets/Uploads/Gross-domestic-product/Gross-domestic-product-September-2022-quarter/Download-data/gross-domestic-product-September-2022-quarter-supplementary-tables.xlsx
  • Table 4 = 21.5 years worth of data for Real GDP quarterly % changes (expenditure approach, seasonally adjusted)
  • Table 11 = 21.5 years worth of data for Real GDP Per Capita quarterly % changes (seasonally adjusted). NOTE: We have asked Stats NZ how they use the production and expenditure approaches to calculate these per capita figures.

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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