Latest GDP Figures — How did GDPLive do?
Last Thursday, StatsNZ released the fourth quarter 2019 GDP figures so it’s time to check how good our machine-learning predictions were. Under normal circumstances, I would do this the next day but in the current Corona-state-of-mind it seemed strange to be writing about economic growth when, currently, businesses are struggling to stay afloat. The good news of December 2019 seems a long time ago. I am not sure if I even knew the term ‘social distancing’ back then. The economy was doing ok.
The official quarterly GDP growth value for Q4 is +0.5% which is slightly lower than our prediction of +0.6%. After the correction of the Q3 value to +0.8%, economic growth slowed down slightly more than expected. Factors that have contributed to the slowdown are essentially the same ones that caused the slowdown in the previous year: a slight decline in net immigration numbers as well as a cooling down of the housing market, resulting in lower consumption and residential investment. In terms of annual growth, the official value is +2.3% which is exactly what we predicted.
Let’s now take a look at our industry forecasts. With a few exceptions, our predictions are spot on. Public administration and construction were the fastest growing sectors with annual growth percentage changes of 4.8% and 4.5% respectively (our predictions were 4.9% and 4.4% respectively). All other sectors grew, as predicted, between 0.5% (education) and 2.6% (rental and real estate services). For the manufacturing (1.1%), retail (3.6%), financial and insurance (1.9%), and scientific support services (0.7%), our forecasts were slightly too optimistic whereas the health care sector (2.4%) did marginally better than we anticipated.
The first quarter 2020 figures will be much harder to predict. The year started fine but once the COVID-19 pandemic gained momentum, the New Zealand economy started to slow down. Reduced activity in some sectors, however, was compensated by increased consumption in other areas (retail of food supplies for example). Now that New Zealand has gone into full lockdown, the economy will come almost to a standstill. Forecasts of such an unprecedented event are near impossible. I think I will skip the next few reviews.