Foreign tourists drive 7-year high in New Zealand economic growth

New Zealand's economy grew by 3.3 percent last year, the highest annual increase since 2007, the government statistics agency announced Thursday.
The retail and accommodation sectors led a growth rate of 0.8 percent in the last three months of 2014, but it was the combination with real estate services and manufacturing that drove the annual growth, according to Statistics New Zealand.
Retail and accommodation rose by 2.3 percent in the December quarter, buoyed by a 15-percent increase in international tourist spending, while household spending was up 0.6 percent.
"This is the largest growth we've seen in retail and accommodation since the 2011 Rugby World Cup," national accounts manager Gary Dunnet said in a statement.
"While some of this growth comes from more spending by New Zealanders, overseas visitors had a bigger impact. Spending by Chinese, U.S., and UK visitors all increased in 2014, though Australians spent less."
The size of the economy was 238 billion NZ dollars (178.19 billion U.S. dollars) for the year ended December 2014.
Finance Minister Bill English said the figures showed New Zealand's economic growth had proved to be consistent and sustainable.
"Where this growth really makes a difference to New Zealanders and their families is in their household budgets. They are earning more, saving more and borrowing less," English said in a statement.
"In 2014, we saw 80,000 new jobs created, a record high participation rate in the labor force of 69.7 percent, and average weekly wages growing at 2.5 percent compared with inflation of 0.8 percent."
However, he warned there were many risks and consistent growth should not be taken for granted.
"The effects of drought and lower dairy prices are likely to have an impact this year, and international risks -- including declining growth prospects for some of our main trading partners -- are ever-present."
The Council of Trade Unions (CTU) argued the top 1 percent of income earners were benefiting disproportionately from the economic growth and cited figures from the Inland Revenue showing worsening inequality.
More of the income generated by the economy was also going to profits of overseas companies, leading to a fall in the resources available to people living in New Zealand, CTU economist Bill Rosenberg said in a statement.
An economic note from the ASB Bank warned that growth over the first half of this year would likely slow, dragged by the decline in milk production due to lower prices and dry weather conditions, although it expected domestic demand to remain robust over 2015.