FILE PHOTO: A New Zealand Dollar note is seen in this picture illustration June 2, 2017. REUTERS/Thomas White/Illustration/File Photo
MELBOURNE (Reuters) – The New Zealand government plans a significant increase in infrastructure spending, making use of low borrowing costs to “build” the country, Finance Minister Grant Robertson said on Saturday.
Economic output of the Pacific country has been ebbing this year with activity in the service industries, construction, mining and manufacturing – main contributors to gross domestic product (GDP) growth – idling.
Year-on-year GDP growth slowed to 2.1% in the second quarter, the lowest since 2013, hurt by record low business confidence, headwinds from international trade tensions, a slowing Chinese economy and Brexit.
The central bank, which surprised the market earlier this month by not easing monetary policy, has repeatedly called on the government to spend more to drive economic growth.
“I can announce today that the government will significantly increase spending on infrastructure,” Robertson told his governing Labour Party’s annual conference, according to a transcript of the speech posted on the party’s website.
“We are currently finalizing the specific projects that the package will fund but I can tell you this – it will be significant.”
Robertson said more details would be presented in December, but added that this is the time to “take the next step forward in our legacy of building” the country.
“Right now, we can borrow at an interest rate of 1.3% for 10 years. Just think about that for a minute,” Robertson said.
“We have the lowest borrowing costs in New Zealand’s history, so it is time to invest.”
Reporting by Lidia Kelly; editing by Richard Pullin