The ‘real’ or ‘constant price’ gross domestic product (GDP) is represented on this graph, which has a ‘log’ (or ratio) scale – equal vertical distances represent equal proportional increases. They suggest that GDP per person has increased by about eight times over these 147 years, an average growth rate of about 1.4% a year (a rate not dissimilar to that of Australia or Britain).
The growth was not uniform. There was little growth in the latter half of the 19th century. GDP per capita had been high in the mid-1860s, as the result of the South Island gold rushes, and borrowings to finance the New Zealand wars. But the ‘Vogel boom’ based on foreign borrowing was a period of population growth rather than output per head. It was followed by the long depression in the late 1870s to the early 1890s. For much of this period the underlying trend was stagnant, or perhaps even slightly downward, although population growth meant real GDP was rising.
From the mid-1890s the economy began a sustained growth path, despite fluctuations, which included the decline in the great depression in the 1930s, and the strong production of the war economy in the 1940s. The average growth rate of GDP per capita in the 75 years between 1890 and 1965 was almost 1.9% per annum.
After the mid-1960s the rate of growth of the economy slowed down. In the 30 years after 1965 GDP growth per capita amounted to between 1.4% and 1.5%. The best explanation for the slower growth is that the ending of the wool economy in 1966 led to major adjustment problems for New Zealand, while the period of market liberalisation in the late 1980s and early 1990s was badly managed and depressed the economy further.
There is some evidence that the economy grew faster in the first years of the 2000s.
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Source: Statistics New Zealand