The economy grew by a little less than expected in the last three months of 2017, the first full quarter under the new Government. The country's gross domestic product (GDP) finished the year with 2.9 per cent growth, compared to the peak of 4 per cent growth recorded in 2016. Economists are expected the current quarter, nearly finished, will show a further slowing. They say "election-related uncertainty" has affected business spending.

That is to be expected. Business investment will probably be cautious until the Government's first Budget appears in May, which will indicate whether it has a grip on its spending and can preserve a surplus that underpins a strong currency and business confidence.

Consumer confidence is suffering no such election-related uncertainty. Household spending in the December quarter was up 1.2 per cent, "influenced by people eating out more and spending more on groceries and alcohol," Statistics NZ reported. "This was reflected in the retail trade and accommodation industry with activity in food and beverage services and supermarkets increasing." Clearly, it was a merry Christmas.

The last two months of the year were also unusually hot and dry, giving farmers real fear of drought and causing them to reduce stock quickly. That will have increased agricultural output in the December quarter and reduced it in the current quarter as farmers build their stock numbers again on the adequate rain they have been getting since New Year. Meat processors are paying farmers more for beef and mutton and export prices are high.

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In fact, the world economy is looking markedly more healthy now than it has been for a decade. So long as other countries do not respond to Donald Trump's trade policies, there is no external reason for New Zealand's economy to end this year with slower growth than it has enjoyed for the past five years.

Those have also been years of significant population growth from immigration. Last year was no exception. Net immigration was at the record levels of the previous year, which makes it concerning that GDP growth fell from 4 per cent to under 3 per cent. That means GDP per person declined substantially. That is the measure of most concern to this Government. It has set itself the task of increasing personal incomes which have not kept pace with growth in the economy.

It has proposed to do this in two ways, by reducing immigration in work categories it believes New Zealanders could fill, and improving the lifetime training opportunities and productivity of the workforce. The first is fraught with risk for sectors that struggle to attract enough local labour; the second is a long, slow project for all governments.

The Government will already be in the throes of this year's Budget. Finance Minister Grant Robertson and his associates will be negotiating with portfolio ministers over how quickly the various parties' election promises can be advanced and how those can be reconciled with wage claims and other new spending demands from the public sector. The latest GDP figures are a gentle warning the Budget needs to be tight.