GDP dropped 1% in September quarter

Economy / news

Revised economic data shows New Zealand only entered recession in March 2024

19th Dec 24, 10:56am by Dan Brunskill

New Zealand’s economy contracted more than 2% between March and September, according to new and revised data released on Thursday.

Statistics NZ said Gross Domestic Product (GDP) fell 1% in the September quarter and 1.1% in June, revised downward from -0.2% as at the original time of the data release.

The data collection agency has significantly revised its historic releases and now believes economic growth stalled in 2022 but didn’t begin to decline until June this year.

Jason Attewell, a macroeconomic spokesperson at Stats NZ, said an annual reassessment of the structure of the New Zealand economy had shown overall growth was stronger than thought.

Previous data releases showed meaningful falls in GDP during 2023 which were considered to be a ‘technical recession’. Updated data shows only one quarter of contraction in March 2023.

Stats NZ said these revisions hadn’t changed its assessment of the current size of the economy only the path it took to get there.

The economy is now smaller than it was in June 2022 and the recent six month decline in GDP is the largest since the 1990s, excluding the short-lived Covid shock.

Economists expected the revisions but may have been surprised by the sharp decline in September. ASB predicted a 0.4% fall, while the Reserve Bank expected just 0.3%.

The largest decline came from the goods-producing industries, which contracted 2.8%, as high electricity prices during the winter stunted production. Primary industries grew 1% as dairy exports grew.

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254 Comments

by morphyoss | 19th Dec 24, 11:00am 1734559228

Wow, this data reflects terribly on the current coalition government.

We're seriously in the toilet now.

by JimboJones | 19th Dec 24, 11:03am 1734559394

It is Adrian Orr it reflects badly on. He kept the OCR too high for too long, after keeping the OCR too low for too long. Maybe one day he will manage to get it right...

by HouseMouse | 19th Dec 24, 11:06am 1734559595

It reflects terribly on Orr, on the previous government, and the current government

they have all contributed to this disaster

by JimboJones | 19th Dec 24, 11:24am 1734560680

What have the coalition done wrong? I thought you were keen on them making big cuts into the public sector?

by KBKIWI | 19th Dec 24, 11:51am 1734562297

Cutting NZ government spending by several billion dollars ("Austerity") was always going to exacerbate the recession to be deeper and longer than necessary. Only an idiot didn't realize this would be the result of the coalition policies - but apparently there are plenty of idiots in the coalition.

by agnostium | 19th Dec 24, 11:55am 1734562552

but apparently there are plenty of idiots in the coalition.

and the people that voted for them ...

by refactornz | 19th Dec 24, 11:59am 1734562799

Even so, the last lot had to go.

by KBKIWI | 19th Dec 24, 12:12pm 1734563521

In terms of just the economy, we would be performing far better under labour right now as they wouldn't have cut billions of dollars in spending like the current government has. Those are simple facts.

by GV 27 | 19th Dec 24, 12:38pm 1734565127

This is revisionism. Robertson had already started cutting before the election and would likely had to keep going as revenues dropped and as activity slowed.

by profile | 19th Dec 24, 3:10pm 1734574247

All major parties backed the batshit crazy lock down policies and now we pay for the laptop class' extended holiday. They should have done a Sweden and stuck to the 2017 Pandemic Plan - rather than doing everything they could to maximise experimental gene therapy sales.

"While the pandemic hit some countries earlier than others, country vulnerability dominated eventually the cumulative impact. Half the analyzed countries witnessed no substantial excess deaths versus pre-pandemic levels, while the others suffered major death tolls."

Variability in excess deaths across countries with different vulnerability during 2020–2023

https://www.pnas.org/doi/10.1073/pnas.2309557120

by macca | 19th Dec 24, 12:44pm 1734565467

And Labour would have therefore kicked the debt hole and recession further down the road to leave the inevitable poison pill for National as usual. National need to get tougher on waste and govt expd.

by buyandhodl | 19th Dec 24, 1:17pm 1734567441

Probably slightly better GDP growth (as GDP = C+I+G+(X-M)), but much larger deficits to support it (i.e 6- 7%), higher rents due to interest deductibility no longer being 'temporarily looked through', higher inflation due to continued high spending + high spending signals leading to higher inflation expectations, and higher interest rates as a result.

Doesn't sound great. A couple bucks off on fresh fruit and vege on the bright side.

by DD62 | 19th Dec 24, 6:26pm 1734585993

agnostium, anybody who visits this site are very well aware that you hate the current government! You actually come across as a bitter and twisted leftist sycophant who keeps throwing his toys. If you would honestly prefer labour ( and the other 2 half witted parties) to be running the country then you should be committed for a psychiatric evaluation ASAP!

by ChrisOfNoFame | 19th Dec 24, 7:29pm 1734589787

Your opinion on valid criticism is noted. Thanks for you (un?)biased view. We are richer for it.

by Nzdan | 19th Dec 24, 10:04pm 1734599054

Don't take what Agnostium says personally, it's not a personal attack on your political leaning. But it's interesting how these articles bring out the simple minded. Rather than addressing the critique, identity-protective cognition takes over, leading to the poisoning of the well.

There are plenty of people here who can provide constructive criticism of the current government without resorting to emotional trainwrecks of ad hominem attacks or engaging in false attribution bias toward others. Many probably voted National and are rather disappointed at the clown show they've been given, but not you of course. Probably an overleveraged Landlord.

by DD62 | 20th Dec 24, 11:24am 1734647075

Straight back at you, chrisofnofame & Nzdan! Both of you are right up there with agnostium and PDK as the most pompous, patronizing know-alls on this site! I would suggest you read my comment again as at know time do I declare my political affiliation other than the fact that I cannot believe any sane person would want Labour (and by association the Greens and TPM) back in power anytime soon! The damage done to this great country during Labours 6 years in power fills me with great sadness and borders on treason. I will never forgive Peters for giving Ardern the keys to the country, an already well known political light-weight!

Like many others, I am also disappointed with some of the current governments performance. Welcome to MMP. the gift to NZ that just keeps on giving! One of the worst electoral systems in the world!!!

by JimboJones | 19th Dec 24, 12:12pm 1734563550

I know that, I voted Labour mainly because of that. But the majority (including HouseMouse as far as I recall) wanted public sector cuts. Supposedly Labour were spending up big and voters wanted National to give that money back to them.

by agnostium | 19th Dec 24, 12:50pm 1734565807

This is what HM said was the reason why he was voting for Winnie. To put a handbrake on the coalition and because he wanted the tax cuts as ai recall..

by HouseMouse | 19th Dec 24, 1:39pm 1734568780

Kind of. Mainly as a handbrake on National’s awful foreign property investment policy. And after it became very clear that ‘the Left’ had no chance of winning the election

by armin-t | 19th Dec 24, 12:51pm 1734565878

I feel the actual makeup of the crown core expenses is missed in a lot discussions about the cuts.

https://budget.govt.nz/budget/2024/at-a-glance/revenue-expenses.htm

Core government services where I would guess is where most of the unnamed bureaucrats that people want to get rid of to save money, is only 5% of government expenses. Trimming 10% of that is nothing, .5%, its purely and ideological on government departments, rather than a serious attempt to cut spending and make things better.

To make any real difference you need to cut the biggies, health, superannuation, social security, and education, and really make things worse for the average New Zealander.

by blobbles | 19th Dec 24, 1:45pm 1734569144

Of course this is the case, fiddling while Rome burns. Those important things you mention take a long time to change, so will be window dressed.

by buyandhodl | 19th Dec 24, 1:14pm 1734567283

Hmm? They are running bigger deficits than the last lot. They also cut taxes.

by interesting1234 | 19th Dec 24, 2:47pm 1734572865

Cutting NZ government spending by several billion dollars ("Austerity") was always going to exacerbate the recession to be deeper and longer than necessary.

Borrowing and spending billions when the economy was on the downturn as a government in 2020 then having the RBNZ remove LVR ratios and encourage a blowout in private debt guaranteed us a large recessionary hangover regardless. Sadly the current lot, as well as Adrian Orr and his minions, have no idea how the economy works.

by kiwimummma | 19th Dec 24, 12:17pm 1734563849

If they are actually making spending cuts then why is Willis borrowing even more than Robertson??

by M0ralHazard | 19th Dec 24, 12:21pm 1734564076

They are cutting jobs and then spending more on benefits to support more unemployed people (very simplified example).

by JimboJones | 19th Dec 24, 12:23pm 1734564232

Because they also made massive cuts to their income (tax cuts).

by KBKIWI | 19th Dec 24, 12:51pm 1734565892

Simple: They reduced revenue through tax cuts, and from lowering PAYE through layoffs, and from lower corporate tax payments in part from reduced government spending in the economy.

by HouseMouse | 19th Dec 24, 1:36pm 1734568615

Putting words in my mouth again Jimbo?

I have advocated for several years for cutting the massive bloat in policy roles in Wellington. I support the current government’s actions on that front.

However:

- I never advocated for cuts in frontline services, quite the opposite. I have indeed advocated for a big uptick in frontline healthcare staff in particular

- I never advocated for austerity, quite the opposite: I would like to see much more spending on infrastructure, and housing. And before you note my past criticism of Kainga Ora - that criticism was not on building houses per se, but how the organisation went about things and how bloated they were. I believe they could have built many more houses if they were an effective organisation

by agnostium | 19th Dec 24, 4:47pm 1734580054

And before you note my past criticism of Kainga Ora - that criticism was not on building houses per se, but how the organisation went about things and how bloated they were. I believe they could have built many more houses if they were an effective organisation

I think this demonstrates your naivety as to how the public service works. There are not a willing and able pool of competent workers with exactly the right skills who can drop into an existing organisational structure just sitting around waiting for a government to tell them to get going and they can immediately start delivering.

To set up an organisation from scratch, and yes it was from scratch, to build the scale of housing required takes a massive amount of investment and time in building the organisation itself. It need processes, systems, regulatory functions, comms. There will be teething problems and some things will not work, but if it had been allowed to mature, the processes and systems can be improved and things start clicking. It never had a chance and this coalition has taken it back to square 1.

Mayor Brown has done similar with Eke Panuku. EP was born out of the fact the council saw what a great job an urban regeneration agency (Waterfront Auckland) can do when it is at arms length from Council. They asked it to be replicated for initially something like 8-10 locations.

Eke Panuku did an amazing job and each time there was a review it was found to have met all it's targets and some and was given even more and more locations. The whole time though the staff was kept at the same level. They were able to take on more because they learnt efficiencies. It was just hitting it's stride and then Brown cancels it because before the election he said he would and so he has to for political reasons, nothing more (even though he found out after he'd slagged it off that they did an amazing job). Sound familiar...

by Averageman | 19th Dec 24, 12:24pm 1734564284

Agreed. Imagine what tax still in full swing, daily govt leftist gobblywoke, gangs running further amok, further bloating of govt service, and further blow outs on govt debt would have left us with.

Simply more higher tax earners in Straya and more 501s in return. Shudders while looking at the math of that.

by KBKIWI | 19th Dec 24, 1:00pm 1734566454

Where to start with your rose tinted delirium? Taxes are higher and more numerous in Australia, so why would we lose high income earners there? Gang numbers are higher than they were a year ago according to governments own official figures as they have been unable to make no changes to Australias 501 policy (unfortunately its harder for police and general public to see them now that they can't self identify by wearing patches), and government debt is going far higher under the new government as they lowered their tax take on unaffordable tax cuts, while at the same time tanking the economy by radically reducing government infrastructure spending in the middle of a recession (which is the opposite of basic corect economic policy in a recession).

by buyandhodl | 19th Dec 24, 1:20pm 1734567601

Taxes are lower as a % of GDP in Australia by about 5% of GDP which is substantial. We are right on the average. Stop just looking at the top tax rate and consider the impact of all the deductions lol. You can still reduce income tax outside of ya rental through negative gearing in Aus. Can't in NZ

https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/globa…

by interesting1234 | 19th Dec 24, 2:52pm 1734573170

You cannot run a society on the premise of ever decreasing tax over time, or you end up with end stage capitalism: with the few owning everything and leeching all the commoners money from rentiering. Now what does society look like today in relation to this.....

by nnz | 19th Dec 24, 6:35pm 1734586552

hey that's the start of every communist revolution's story!

by buyandhodl | 20th Dec 24, 12:48pm 1734652095

If you follow the link you will see our tax take as a % of GDP is relatively stable over the past 25 years. A little higher under Clark, a little lower under Key. All within a % or 2.

https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/globa…

by dollar_bill | 19th Dec 24, 1:11pm 1734567119

what are you talking about? must be a weird dissonance going on in your head right now.

Tax is now just a little better but costs have escalated elsewhere and it's worse than before.

Social housing, Ferry, Water Infrastucture and Hospital builds have been wrecked and the accompanying rightist gobblywoke is much worse than before

Gangs patches coming off has done nothing to curb gang activity and is just as bad or worse than before

The Govt. service has hardly shrunk but morale and services are just as bad or worse than before.

Blow out's on debt are now MUCH MUCH worse than before

Tax earners have moved to Australia in greater numbers than they did before.

Any more reckons you need putting right?

Your math must be as good as the Finance Ministers because I'm not seeing many KPI's or targets being met which are all just as bad or worse than before.

When are people going to admit it - The Left are just better at running the Govt. and social services in General

The Right should stick to managing their trusts and rental portfolios

by dumbthoughts | 19th Dec 24, 12:33pm 1734564819

Exactly, we have been served poorly by all three.

Orr is the equivalent of a daytrader who somehow has a knack for buying the top and selling the bottom. His timing and direction was all wrong, and we are paying the price now.

The last government spent like there was no tomorrow when it should have been more reserved and took the approach of the only thing that matters is how much money is being spent, not the quality of the spending, due to slavishness to their ideology.

The current government is cutting spending with seemingly no consideration as to how "considered" government expenditure might actually stimulate the economy, due to slavishness to their ideology.

by meh | 19th Dec 24, 12:06pm 1734563161

It reflects badly on all of us.

Bid up house prices, inflate asset prices, borrow and spend until you can't spend anymore... Giving too much power to these institutions to manage the economy on our behalf...

Maybe one day we'll get it right.

by RookieInvestor | 19th Dec 24, 11:03am 1734559409

nothing to do with the current government, more to do with the previous

by redcows1 | 19th Dec 24, 11:04am 1734559481

Everything to do with the idiots that voted them both in.

by RookieInvestor | 19th Dec 24, 11:10am 1734559850

is there any other option?

by Baywatch | 19th Dec 24, 11:14am 1734560070

Interesting, that with the current numbers released you are still claiming that its nothing to do with the current coalition?

by RookieInvestor | 19th Dec 24, 11:17am 1734560269

it is the consequence of poor fiscal management of the previous government.

by nnz | 19th Dec 24, 11:38am 1734561511

and I suppose that happened because of the mismanagement and debt pile of the Key years? Proportionally as a % of GDP both the Key and Ardern governments borrowed the same amount (20%). Key delivered quite a lot for his debt pile, but debt is debt and no government, including the current, has any real ambition to pay any of it off before the outer years of their turn (in other words, easier to just get voted out than actually deal with it).

by rastus1 | 19th Dec 24, 12:00pm 1734562820

I blame Key more the Jacinda. Simply because the guy had the financial skill to know what he was doing. Ignorance was not his excuse.

Jacinda was ill equipped and made serious blunders. But they were not deliberate, she just didn't know any better.

Key did, He knew he was enslaving NZ inc to the global banksters - his masters.

by nnz | 19th Dec 24, 12:31pm 1734564687

I think both of them were keen on retaining their high polling, which spending gave them. They both used crises to justify "building back better", which is popular in the main.

But Key also sold a bunch of stuff, so his borrowing is artificially small. Those sales cost us in dividends longer term that we never replaced with higher taxes. It's cynical politics.

by redcows1 | 19th Dec 24, 11:17am 1734560223

Of course there is. Even to the point of not voting as a protest vote because they're all so poor.

Most simply refuse to see reality so simply other any alternatives, calling them dgms for instance.

by RookieInvestor | 19th Dec 24, 11:18am 1734560322

ok, start a don't vote party.

by kiwimummma | 19th Dec 24, 12:23pm 1734564213

I don't vote because none of the parties are sufficiently not terrible to deserve my vote. However I do not think this registers on any level as a vote of no confidence in all the parties / the system in general. I think the media, public & powers that be would frame me as apathetic.

by interesting1234 | 19th Dec 24, 2:56pm 1734573410

If you don't exercise your right to vote then you have had, and will continue to have, 0 influence or right to complain about how our country is being run. For all you know your vote could cancel out someone else's vote for a party you dislike the most. Not voting means we do not have an accurate representation of what the true majority want. Please, in future, do your civil duty and vote.

by hootenany | 19th Dec 24, 1:24pm 1734567854

I really want an option on the ballot, "you all suck", if that gets over 50% all parties must be disbanded and start again.

by Grattaway | 19th Dec 24, 11:13am 1734560039

well I was one who voted them in - really glad to get rid of the other destructive socialist clowns

and having operated a business here for 25+ years I understand exactly how bad a place we were in

The disapointment is that the Nats are being so weak sorting the issues

and to many people in NZ are still expecting the govt to deliver Nirvana for them

by Baywatch | 19th Dec 24, 11:14am 1734560097

Suck it up then..

by safeashouses | 19th Dec 24, 11:23am 1734560586

@baywatch - what a thoughtless post - suck it up - really

by Baywatch | 19th Dec 24, 11:40am 1734561656

True .....just such a bad news day ...moderator please delete the comment and my login please

by Grattaway | 19th Dec 24, 11:28am 1734560913

I dont need to suck it up - the world is out there with plenty of other opportunities.

part of the problem is a failure to understand exactly that

by Baywatch | 19th Dec 24, 11:42am 1734561775

Yes - exactly why so many have bailed I guess (smart ones)

by nnz | 19th Dec 24, 11:45am 1734561957

Do you notice there's a pattern where ex PMs leave the country after they're done? Clark went to the UN, Key bought his Sydney house, Ardern went to Harvard. I imagine Luxon will go back to Chicago?

Surely this is an anomaly. Though Luxon, Key and to an extent Ardern essentially lived/worked overseas most of their lives before politics.

by J.C. | 19th Dec 24, 3:05pm 1734573928

Before politics Jacinda had little international experience beyond 1 week at the NYC soup kitchen and the Tony Blair gig.

by nnz | 19th Dec 24, 6:41pm 1734586867

Don't forget she was president of the Union of Socialist Youth. She was away for quite a while.

by RookieInvestor | 19th Dec 24, 11:15am 1734560138

well put.

by morphyoss | 19th Dec 24, 11:22am 1734560542

National have taken their eyes entirely off the ball. Their entire economic policy was restoring tax deductions. It has failed.

Meanwhile they are spending their time focusing on culture war things, tunnels under Wellington and Micro-managing councils. Willis is missing in action and luxon is a waste of space.

Turns out we have the wrong people at the top in the jobs at a critical time. We need the folks that are there to make the tough decisions. We dont need people that are just there for the titles.

The biggest economic contraction since 1991 they just said on RNZ. The current b-team dont have what it takes to get us out of this problem.

by kiwikidsnz | 19th Dec 24, 11:31am 1734561093

Your strawman blameshifting is conflating monetary policy with fiscal policy. Monetary policy is RBNZ responsibility.

The implication that the current Opposition would provide better fiscal & economic management is beyond laughable, considering how we ended up here.

by Te Kooti | 19th Dec 24, 11:40am 1734561621

No one is denying that Labour played a significant role in the current situation and it would be a disaster if they return in current shape.

But, there is a case to be made that coalition have made things worse if anything. If the fact that they are making things worse at a slower pace than Labour would is enough for you - great!

by nnz | 19th Dec 24, 11:54am 1734562497

Indeed. It's like saying it's better to die of cancer than a heart attack. But also, it's fair to say every government in the last 30 years in NZ has been worse than the one that came before it. Given another 5 years I fully expect the current one to look as bad, if not worse, than the previous one having broken or bent nearly all their promises and commitments only one year in.

And the real problem is Labour can sail into 2026 with a pitch for earlier surplus via tax. Whether you like it or not, their CGT/wealth tax is a viable solution to the deficit. Combined with tall poppy syndrome, many kiwis would opt to go with that solution to bring debt down sooner and get back to the lolly scrambles before 2032. It wouldn't probably create growth or prosperity, but it would probably please the ratings agencies and look "responsible". Assuming the public sector has already been right-sized by 2026, they wouldn't even have to do any dirty work.

by blobbles | 19th Dec 24, 11:47am 1734562066

Pffft. It's established in economic management that the government becomes the spender when there is a general contraction, to keep the economy afloat. They should be anti-cyclical in their spending. National have gone pro-cyclical, reducing government spending when it should be increased. But its clear that the people in charge had never read an economic text book, so decided bringing in austerity during a downturn, would somehow work, despite the same never working anywhere else before ever. There is plenty of recent examples of austerity policies causing doom loop economic contractions, like the one we find ourselves in now. But we are special, right? RIGHT? (oh damn, the GDP drop says we aren't).

The RBNZ had some hand in this, but they aren't the main driver. 11% of Wellingtons jobs are gone and that's just the first round of austerity during business contraction cycles. Other districts are around half to that or a bit less. That's mostly government policy driving those job losses.

by Hastings | 19th Dec 24, 1:58pm 1734569902

Luxon’s credibility diminishes with every release of economic and social data. His team are laser focussed but unable to respond to evidence their policies don’t support wellbeing, social cohesion, or productivity. The departure of skilled workers eventually reaches a point that’s unsustainable, lower taxes with threadbare services and infrastructure doesn’t appeal to everyone, it seems.

by Te Kooti | 19th Dec 24, 11:33am 1734561213

I agree with you.

Yes, the Nats/Coalition inherited a mess, but have done very little to turn the ship around since coming to power. Not only could we not afford the tax cuts to property investors, we could not afford the distraction of the coalitions policy compromises - specifically the treaty principles bill. Instead of debating economic growth agenda's, we are fighting amongst each other. We are all going to pay a price.

by blobbles | 19th Dec 24, 11:41am 1734561681

Turn the ship around? They cancelled the ships and that is just one of many "throw the baby out with the bath water" actions they have done which is contributing to this ongoing mess.

Surely the finance minister has to step down at some point.

by LapisLazuli5297 | 19th Dec 24, 2:22pm 1734571375

The way those new ferries would have really contributed to the NZ economy is by being built here. Thousands of direct and indirect jobs would have been created as well as a whole ecosystem of local suppliers and contractors. And that's the problem. Too much of our money is sent offshore every month and everyone left is wondering why people are feeling so poor.

by agnostium | 19th Dec 24, 4:53pm 1734580383

Right so you would have been happy for the government to to pay 8-20 times more that the Labour plan and take 10 years more by trying to create a ferry building industry out of thin air.

by nnz | 19th Dec 24, 8:02pm 1734591728

I wouldn't necessarily be happy, but the government used to regularly do such seemingly silly things. It's how we ended up with power dams, aluminium smelters, a gas industry, a refinery, methanex... We didn't know how to do any of that until the government decided we should learn.

NZ needs some industry, the cows won't save us long term.

by agnostium | 19th Dec 24, 11:53pm 1734605638

I actually would love for the government to invest in public works and the public service. My point was that the alternative to National's ferry fiasco is not to build ferries ourselves, we do not have the time or the expertise. The solution is/was Labour's solution.

This is one way to get good at building infrastructure, note this bit in particular:

Unlike infrastructure projects in Britain or America, which are heavily reliant on external consultants to handle all stages of the project, this group of well-paid in-house engineers led much of the Madrid Metro expansion. The team stayed largely the same throughout the different projects, meaning that they were able to learn from their experience and apply it to future projects.

https://worksinprogress.co/issue/how-madrid-built-its-metro-cheaply/#:~….

by WestieAJ | 19th Dec 24, 12:20pm 1734564029

No one knows how to turn off the Auto Pilot (public service).

by Te Kooti | 19th Dec 24, 12:31pm 1734564697

I think we found New Zealands metaphor for 2024 - our economy was captained by an individual where there were questions over their experience, it was left on autopilot, hit a reef and sank

by kiwimummma | 19th Dec 24, 12:35pm 1734564955

Tax cuts to landlords?? I'm not a landlord but restoring what was previously a founding doctrine of business (deductibility of business expenses that were used to generate business revenue) is not a tax "cut".

by Te Kooti | 19th Dec 24, 12:47pm 1734565655

Is removing the capital gains test also a founding doctrine of business?

by rastus1 | 19th Dec 24, 1:27pm 1734568045

Most capital gains are just a consequence of keeping up with bank created inflation (recent property madness excepted).

by Baywatch | 19th Dec 24, 11:43am 1734561814

Well put

by WestieAJ | 19th Dec 24, 11:45am 1734561946

Let me be clear. At the end of the day. What I would say to you is. It's not about the fricken targets.

by delboy | 19th Dec 24, 11:37am 1734561446

Nicola Willis has been a huge disappointment in my view.

Robertson was a disaster but Wills is equally as bad.

by blobbles | 19th Dec 24, 1:21pm 1734567676

I don't know why anyone thinks putting an English Lit major who hasn't read anything on economics, cannot describe Austerity, cannot describe productivity, believes running the government books is equivalent to running a household... would be anything but a disastrous finance minister.

by Te Kooti | 19th Dec 24, 2:10pm 1734570625

First Robertson and now her, maybe we should get someone with a finance and economics background?

The quality of individuals in key positions in NZ is really, really poor. It's almost as if they are in their positions because of who they know and what "box" they tick rather than qualifications.

by LapisLazuli5297 | 19th Dec 24, 2:39pm 1734572392

You can cope with incompetent Ministers in charge so long as the technocrats in the civil service at the top of their game, have serious subject area expertise and are generating good advice and briefs.

by Te Kooti | 19th Dec 24, 3:31pm 1734575478

Y0u reckon Willis is listening to Treasury? Please.....

by ChrisOfNoFame | 19th Dec 24, 7:32pm 1734589948

I have no doubt Willis is listening to Treasury. However, I suspect she doesn't understand much of what they're saying.

by agnostium | 19th Dec 24, 4:55pm 1734580544

You can cope with incompetent Ministers in charge so long as the technocrats in the civil service at the top of their game, have serious subject area expertise and are generating good advice and briefs.

Best way to get the best minds working for the government, call them useless, pay them less than the private sector, ignore their evidence-based advice when it conflicts with your ideology, and then sack them in massive numbers for ideological reasons ... Oh wait

by buyandhodl | 19th Dec 24, 2:23pm 1734571387

In fairness, the last person with economic or financial knowledge in that role was Roger Douglas (Accountant). Or perhaps Bill English (Economic History).

by Pragmatist | 19th Dec 24, 11:25am 1734560729

Could equally blame the idiots that didn't vote [them out].

by safeashouses | 19th Dec 24, 11:19am 1734560383

@Rookie - i tend to agree -

by Rhumline | 19th Dec 24, 6:19pm 1734585550

There comes a time (and we're well past that) when the current crop of idiots can't blame the last lot. Face facts, this is the most corrupt, divisive and incompetent government we've had in a looong time.

by buyandhodl | 19th Dec 24, 2:24pm 1734571484

Lol. And you're saying that time is one year after the election, when the monetary tightening cycle has only just started to end?

by Blackdog | 19th Dec 24, 11:04am 1734559455

The policy settings that got us here a from the last government. It will take years to turn around after 6 years of the most incompetent government ever.

by Pragmatist | 19th Dec 24, 11:29am 1734560993

Except this govt seems hellbent on being even less competent than the last lot, and that takes some doing.

by M0ralHazard | 19th Dec 24, 11:49am 1734562197

Isn't most of the criticism about Labour that they were stimulating the economy too much? That doesn't seem like something that would cause GDP to drop like it has recently. You know what would cause GDP to drop rapidly? Cancelling a whole lot of projects and firing people...

by KBKIWI | 19th Dec 24, 1:02pm 1734566525

This is 100% incorrect. The cause of the current economic collapse is the current government cutting spending in the middle of a recession, thereby making the recession a lot worse and longer. Even a first year economics student knows that the correct government policy in a recession is to INCREASE government spending, not decrease it. The fact that National of all parties is doing the reverse of obvious economic policy is an absolute disaster.

by Advisor | 19th Dec 24, 12:23pm 1734564233

I reckon the plan should have been to increase spending in key areas (frontline public services, basic infrastructure, etc.), while still cutting meaningless jobs in back-end bureaucracy.

However, NACT was so overwhelmed with ideological rhetoric and waging war on bureaucrats that they completely ignored their spending and investing role as a government.

by ChrisOfNoFame | 19th Dec 24, 12:29pm 1734564575

And nothing to do with the RBNZ then? You're clearly not Jarod then. He, like I was, was saying the RBNZ should have started easing back in November 2023. Shame no one listens to us, ay?

by M0ralHazard | 19th Dec 24, 12:33pm 1734564822

Labour spent too much when the economy was going well, the RBNZ engineered a recession due to imported inflation flowing unchecked into our economy, National are making it worse by going for Austerity when they should be spending.

Plenty of blame to go around

by kiwimummma | 19th Dec 24, 12:43pm 1734565432

WTF?? The cause of the inflation blowout was QE, nearly zero interest rates & government forced productivity nosedive (AKA lockdowns) - some was imported of course because other countries were doing the same ridiculous things we were doing - just not as bad. National ARE spending - way too much - Willis is borrowing MORE than Robertson. What we need is way way better productivity (by getting rid of the unproductive public sector as much as possible except frontlines) & policy which ENCOURAGES investment and innovation in the private (productive) sector.

by M0ralHazard | 19th Dec 24, 12:54pm 1734566072

As Jfoe keeps saying, the global price level increased by approx 30% after Covid. How exactly were we meant to stop this happening in NZ too?

National are cutting spending on public sector jobs, infrastructure, etc then having to spend more money supporting people who are unemployed. Who would have thought! Then they borrowed for Tax Cuts, cutting their income.

We do need better productivity, but cutting the public sector to achieve that is just ideology and not based on evidence at all.

by Middleaged | 19th Dec 24, 2:30pm 1734571844

Nicola Willis was quite clear that the government is not borrowing to fund the tax cuts. The Tax cuts are funded from other things, while the borrowing is for other, other things.

/sarc

by agnostium | 19th Dec 24, 2:21pm 1734571260

The public sector is not unproductive. Teachers and police are not unproductive they are a core driver of productivity. Without education and enforcement of the rule of law productivity would crater.

by kiwimummma | 19th Dec 24, 12:38pm 1734565126

Perhaps that is the problem if what is being taught at universities is that governments can cure economic woes by spending taxpayer money. What we need is improved productivity & an efficient government.

by thinktank | 19th Dec 24, 11:04am 1734559469

Really it isn't a reflection on the Government at all. It is the RBNZ's overreaction to high inflation that has caused this, and it ain't over yet.

by Blackbeard | 19th Dec 24, 11:19am 1734560353

My view is it’s caused by the eggs in one basket NZ economy - property baby!

by OldSkoolEconomics | 19th Dec 24, 12:37pm 1734565051

It's a mix of useless leaders and policies.

- focus on residential housing as investment

- awful immigration policies importing people who don't contribute to society of financially (tax)

- rbnz terrible ocr settings . Terrible forecasting and reactions.

- terrible management of trade and borders during covid

- duopolies etc (banks, supermarkets)

- no action to stop the exodus of young skilled peeps

- wasting money by successive government and no saving for rainy days

- no huge infrastructure investments now when we need them

Bit of a joke nz... I can't see why the 'experts' now think the worse is over. They must have a magic export industry about to launch in nz

by J.C. | 19th Dec 24, 1:02pm 1734566543

They must have a magic export industry about to launch in nz

NZTE/MFAT

by Uncle Bulgaria | 19th Dec 24, 11:21am 1734560473

Not sure its as simple as that but what we probably don'rt need is more austerity from Finance Minister NickAllYour Wallets

by J.C. | 19th Dec 24, 1:04pm 1734566656

NickAllYour Wallets

Chuckle. That's a clever moniker. But is it misogyny or not? That is the question.

by Crazy Horse | 19th Dec 24, 1:29pm 1734568145

Well folks, that's what you get when you mix a government who "bloated" the public service, full of people that couldn't even balance a check book, then spending millions of taxpayer $$$ on some "pet project" that happened to tie in with their university studies, that convinced them that was the way to go - and don't listen to anyone else, as what would they know ?

Then you have employers, so terrified of having to raise wages (thinking that's the only way to cut back expenses) so loving these immigration numbers, as they can employ someone from overseas and not have to raise salaries/wages at all - as they will work for less ! Who cares if overall productivity goes down - as long I have the "big house , holiday home and a boat moored at the nearest marina".

Mix that in with the property crazed landlords and their precious "property portfolio", to enrich their family trusts etc, while extracting as much cash out of the wage earners pocket as possible . All boosted for them by favorable tax conditions, while they think they are doing society a "favour" by supplying a house for rent, when in a country like NZ, property prices should reflect average incomes and these same people should be able to buy a house - not just benefit the greedy banksters and some landlords that think they are a "financial genius" because of basic market timing.

Then we have that strata of NZ society that is constantly is looking for a "hand out" while bleating it's everybody else's fault BUT mine ! This "do nothing - everyone owes me something" brigade permeates throughout NZ society.....and is now becoming (or is) generational.

Cap that of with governments, that are all to scared to take the corrective measures that could actually improve things, all because they may not get voted in, in the next election..... pathetic, where are the leaders in NZ with a backbone ???

by leamington_05 | 19th Dec 24, 11:00am 1734559246

National don't care. They got interest deductibility through. That's all that mattered. The rest (incl GDP) is mere detail.

by donny11 | 19th Dec 24, 11:50am 1734562230

Pretty much. The party seams to be pretty much captured by large land owning interests. Their whole policy platform is designed around serving the interests of these benefactors (removing removal of interest deductibility). It was interesting seeing Arena Williams discussing the fast track approvals bill. In essence this is bill is designed to give tax free money in the form of land price appreciation to all the major doner's of the party. This is pretty much the backbone of their economic policy. Enrich a few special interests and let the rest of the economy go to the dogs. Relevant link below

https://www.reddit.com/r/auckland/comments/1hgonlb/cronyism_at_its_fine…

by agnostium | 19th Dec 24, 5:09pm 1734581365

Some big ACT party hitters (the real ACT not Seymour), have been pointing this out behind closed doors as soon as Luxon got in.

Straight up corruption. Plain and simple.

by nnz | 19th Dec 24, 12:04pm 1734563043

You'd think a far more efficient and equitable option to fast track is simply to suspend the RMA for a year, for any project that's on private (not crown) land. Doesn't favour anyone in particular, but anyone with a plan to do something can just do it. Make them actually start the project within the year to be eligible, rather than these wind farms with 20 year open consents that are just to boost their stock price and lock out competitors.

And it would avoid the most contentious, corruption-prone things like mining and oil which are not on private land. Unless they are, in which case go for it.

by Middleaged | 19th Dec 24, 2:38pm 1734572298

Damn! Great link.

Really laying it out nice and simple.

by Kiwisaint | 19th Dec 24, 11:00am 1734559250

$NZD to go into freefall...

by Independent_Observer | 19th Dec 24, 11:46am 1734561996

Haha I’ve been thinking this is going to happen for the last 12 months or so but it kept the 0.60 resistance. Now though it appears the be crashing through that. Is 0.50 the next resistance? I’ve got some USD I might bring back to NZD if it falls far enough.

by donny11 | 19th Dec 24, 11:53am 1734562398

This combined with another $20 rise in the price of oil will lead to OCR increases

by Albert2020 | 19th Dec 24, 1:48pm 1734569327

I get paid in USD and have had a 11% pay rise in the past 3 months without lifting a finger.

by J.C. | 19th Dec 24, 2:21pm 1734571260

No time for gloating my friend

by ChrisOfNoFame | 19th Dec 24, 12:04pm 1734563068

Yup. As expected. The double whammy of this government borrowing far, far more than they promised and a shocking growth outlook.

The NZ/USD cross has broken through all recent troughs and we now need to go back to October 2022 when it hit 0.55. Methinks we'll be testing that mark very shortly. ... Virtually guaranteed if the rating agencies cut our credit rating.

by M0ralHazard | 19th Dec 24, 12:15pm 1734563710

All we need is for Oil prices to head back towards $80 and cause tradeable inflation to pick back up, then we really are screwed

by JimboJones | 19th Dec 24, 11:01am 1734559305

This is great news really, as Orr will need to make much bigger cuts.

by lfk | 19th Dec 24, 11:06am 1734559600

Actually, what I would say to you is, isn’t it great how we’re destroying the economy to allow the RBNZ to decrease interest rates? I think kiwis will appreciate we are working really hard at this.

by HouseMouse | 19th Dec 24, 11:07am 1734559646

Sarcastic?

its terrible news

by JimboJones | 19th Dec 24, 11:11am 1734559866

Its bad that it happened, but that's in the past (3-6 months ago), we have already been through that. Many here (including me and I believe you) were calling for Orr to cut much sooner than he did.

Its good that the number is so bad, as Orr should now cut deeper.

by Grattaway | 19th Dec 24, 11:16am 1734560184

If we had some accountability Orr would have been fired - and still should be

Along with a number of other Govt heads

by interesting1234 | 19th Dec 24, 11:19am 1734560384

I've been calling for this since 2021 and he then got double pay and another 5 year term... really inspires confidence in this countries leadership right (sarc)

by Blackdog | 19th Dec 24, 11:10am 1734559853

3.5% mortgage rates by this time next year

by JimboJones | 19th Dec 24, 11:12am 1734559933

That would be about 1.5% OCR, about half what the RBNZ are saying. But what would they know...

by Justa comment | 19th Dec 24, 11:14am 1734560082

3.5% mortgage rates, have you learnt nothing from the last 3 years ???

by M0ralHazard | 19th Dec 24, 12:16pm 1734563782

It wouldn't be so bad if they seriously restricted the LVRs and DTIs at the same time, but they won't.

by Independent_Observer | 19th Dec 24, 11:47am 1734562030

Yes great news as people lose jobs and business fail.

by JimboJones | 19th Dec 24, 11:52am 1734562345

The number announced today is for the job losses and business fails in the past. But it will wake the RBNZ up as to what they are doing to the economy, that is the good part.

by agnostium | 19th Dec 24, 12:05pm 1734563125

Far out man, the coalition are making it worse. There is fuck all Orr can do if the coalition push through an austerity approach going into and during a recession.

This austerity approach has been done many times before and failed miserably. Was the Bank Of England able to bail out the Tories? No.

It's out of Orr's hand now.

Labour's mistake was not enacting the right fiscal strategy as Orr cut. National is making the same mistakes but in reverse.

by Independent_Observer | 19th Dec 24, 12:09pm 1734563370

Exactly this.

by JimboJones | 19th Dec 24, 12:20pm 1734564029

I didn't vote for the coalition, and I am not a fan of austerity. But have they really cut that much? Just over 2000 jobs according to this: https://www.rnz.co.nz/news/national/530400/two-thousand-jobs-lost-from-…

Let's say they earned $100k each, that is $200 million, a pittance really.

I think Orr could easily stimulate the economy by slashing the OCR. But it would probably be another mistake to add to his big list of mistakes...

by M0ralHazard | 19th Dec 24, 12:24pm 1734564275

Don't forget the jobs lost in the private sector because govt infrastructure projects have been paused or cancelled.

by agnostium | 19th Dec 24, 12:56pm 1734566174

They canned shovel ready projects in favour of business cases for RONS.

They also cut funding from Council's that rely on that finding to progress their local projects.

And during the transition, the effect was essentially to put all public tenders on hold as people awaited what f**wittery Simeon decided to pull out his troll arse.

For ideological reasons, nothing more. Yes they have cut massively and this is reflected in the dire figures.

by J.C. | 19th Dec 24, 1:09pm 1734566977

Yes they have cut massively and this is reflected in the dire figures.

Do people expect things to get better before they get worse? Isn't that inconsistent with the idea of creative destruction?

One thing about Aotearoa attitudes and behaviors is that you can always expect that we look for a scapegoat to blame.

by interesting1234 | 19th Dec 24, 3:07pm 1734574069

One thing about Aotearoa attitudes and behaviors is that you can always expect that we look for a scapegoat to blame.

We've all learned for those at the top in parliament XD but in all seriousness yes we want accountability for the last government still - especially given lockdowns were deemed illegal and not a head rolled, so many broken promises, not a head rolled, just be kind, they had a go right? (sarc)

Now we have the same tactics buy the current lot. Nobody would mind if they stood up and said they made some bad decisions so they are going to do (insert strategy here) to head in the right direction. But the ownership, where is it?

by Middleaged | 19th Dec 24, 2:42pm 1734572562

They've also cancelled funding in social services, leading to cancellation of contracts, job losses, and a reduction in front-line services. But I guess those people were unlikely to vote national anyway.

by buyandhodl | 19th Dec 24, 2:25pm 1734571543

'Austerity is when governments try and close deficits by reducing spending or raising taxes'

Uh... deficits as a % of GDP are rising, and they've cut rather than raised taxes..... do you know what austerity is?

by agnostium | 19th Dec 24, 5:19pm 1734581941

https://en.m.wikipedia.org/wiki/United_Kingdom_government_austerity_pro…

This might help you understand what the coalition are doing and what effect it will have.

by meh | 19th Dec 24, 4:46pm 1734580014

Orr's mistake was not enacting the right monetary policy to Labour's fiscal spending, or to a supply side shock.

FIFY

It wasn't a monetary problem to begin with. I'm pretty sure the fiscal spending was announced before Orr's emergency OCR cut and QE.

Labour's fiscal spending, the wage subsidy at least, was the right idea. It was to ensure people could still pay their rent and mortgage, their necessities. It was either that or let the market crash suddenly.

We should've adjusted to reduced economic activity, instead we partied and profiteered on cheap debt. All thanks to ourselves and Orr.

Now we're up the creek with no paddle, drained fuel tanks, and the helmsmen are clueless and rudderless.

by rastus1 | 19th Dec 24, 12:06pm 1734563179

Good grief! Do you really think NZ problems are due to the RB tweaking rates one way or the other?

WE are the problem, what we vote for, what we expect, what we will work for and so on.

A few decimal points in interest rates wont change any of us.

by HouseMouse | 19th Dec 24, 2:21pm 1734571274

Well put

by Independent_Observer | 19th Dec 24, 12:08pm 1734563320

You mean what the government AND the RBNZ are doing to the economy. The RBNZ is there to keep inflation stable. We really need the government to step in with some big stimulus programs but they won’t because they got elected on the opposite mandate - but that now could be their archives heel for the next recession if they refuse to do a 180 on their policy positions (and I’m politically unbiased on this - didn’t vote National or Labour last election).

by ChrisOfNoFame | 19th Dec 24, 12:08pm 1734563310

Jimbo: "This is great news really, as Orr will need to make much bigger cuts. "

Will he?

Won't he be worried about imported inflation as our dollar tanks?

by leamington_05 | 19th Dec 24, 12:14pm 1734563668

NZD might have something to say about that.

by King of the whiners | 19th Dec 24, 11:02am 1734559320

''The data collection agency has significantly revised its historic releases and now believes economic growth stalled in 2022 but didn’t begin to decline until June this year.''

So this is a NACT recession. Time to own it NACT fanboys.....

by thinktank | 19th Dec 24, 11:05am 1734559553

Remind me who was creating policy in 2021-2022? Recessions don't happen over night.

by Advisor | 19th Dec 24, 11:02am 1734559343

There's been a sustained exodus of productive workers and enterprises from NZ over the last few decades, thanks to growing favour for rentierism. This got supercharged over the last few years, particularly during Covid, with excessive fiscal and monetary stimuli in the economy and record low-skilled migration levels.

We're probably at a point where the parasite can only survive by killing off the host.

by redcows1 | 19th Dec 24, 11:08am 1734559714

So many comments blaming either labour, national or Orr. Infact it's much more a long term structural thing and is what voters wanted when they voted BAU multiple times.

by HouseMouse | 19th Dec 24, 11:11am 1734559900

Exactly!

the partisan observations from both sides are tiring, and wrong

by Independent_Observer | 19th Dec 24, 12:05pm 1734563140

Easy to just blame the other side - it helps you to avoid critical thinking.

by JimboJones | 19th Dec 24, 11:15am 1734560127

What makes you think its structural? Orr planted his foot on the accelerator and we accelerated but went too fast. Then he slammed on the brakes, we slowed but too slow. The economy is completely linked to the OCR - as designed. But Orr is driving like a madman.

by redcows1 | 19th Dec 24, 11:24am 1734560690

Ummm maybe this.

https://www.rnz.co.nz/news/business/537075/nz-ranks-low-in-global-econo…

Just keep doing what we're doing, we will reach the bottom.

by JimboJones | 19th Dec 24, 11:29am 1734560991

I don't think one bad year indicates a structural problem. How did we rank in the previous years?

In the year to June 2023 we had 4% GDP growth...

by Whatwillhappen | 19th Dec 24, 11:45am 1734561956

Err... From the article:

The data collection agency has significantly revised its historic releases and now believes economic growth stalled in 2022 but didn’t begin to decline until June this year.

by Advisor | 19th Dec 24, 12:34pm 1734564881

Many renowned economists argue a nation's current account balance is a lagging indicator of its economic competitiveness.

Ours has been stuck above 6% for the last 4 years, which many bank economists were asserting we would quickly claw ourselves out of post-Covid. We currently rank worse than Benin, Mali, Togo and Yemen on current account balance.

by meh | 19th Dec 24, 12:22pm 1734564165

The economy is linked to debt issuance by private banks, and our willingness and ability to spend it into the economy. Structurally flawed.

And it's linked to the flow of already printed money, currently stored in financial assets at the top, to flow down to the bottom and spent into the economy. But most of it's numbers on a screen, requiring more debt and demanding more returns. Structurally flawed.

There's a circular flow of currency required, not debt issuance and storing.

by interesting1234 | 20th Dec 24, 9:31am 1734640260

Correct, and as we know, the wealthy don't spend in aggregate, they accumulate more assets. Solution? Focus on reforming the tax system to remove incentive to accumulate assets.

by kiwimummma | 19th Dec 24, 12:52pm 1734565934

What makes you think its structural? Answer: simple observation.

by travnz | 19th Dec 24, 11:03am 1734559394

Orr should be offering his resignation without delay.

by Blackdog | 19th Dec 24, 11:04am 1734559497

He should be prosecuted

by Baywatch | 19th Dec 24, 1:07pm 1734566854

And Willis ...

by J.C. | 19th Dec 24, 1:12pm 1734567168

Orr should be offering his resignation without delay.

Knives out for Lord Orr. Of course many thought he was the cat's whiskers when he pulled out all stops to keep the Ponzi ticking over.

Damned if you do. Damned if you don't.

by interesting1234 | 20th Dec 24, 9:31am 1734640302

and double the pay to fail on performance objectives.

by thinktank | 19th Dec 24, 11:03am 1734559422

Only way to correct Orr's overcorrection is to reduce the OCR. Interest rates will be in the high 3% in a year's time.

by JimboJones | 19th Dec 24, 11:16am 1734560187

Orr needs to overcorrect to fix the overcorrection of the overcorrection.

by ChrisOfNoFame | 19th Dec 24, 12:14pm 1734563656

It won't help NZ Inc if we have low interest rates but the new money goes into existing assets. Both government & the RBNZ need to sort this silly behaviour out !!!

by Zwifter | 19th Dec 24, 12:27pm 1734564479

High 4's will do it, there is no way we will be going into the 3's again any time soon. If we go into the 3's again its all over rover.

by ChrisOfNoFame | 19th Dec 24, 12:34pm 1734564855

Why? You don't say why.

by Retired-Poppy | 19th Dec 24, 2:02pm 1734570160

Zwifter, my compliments to you for dropping the Doom and Gloom line "this Christmas is the last chance to buy a house"

This line was pretty bad - and the several that preceded it.

by RookieInvestor | 19th Dec 24, 11:20am 1734560407

The economy is now smaller than it was in June 2022

i guess that's the aim, bring the economy back to the natural level before the previous government stimulated the crap out of it.

by huttman | 19th Dec 24, 11:14am 1734560052

RBNZ needs to stimulate the economy now or a financial crisis is in the make.

by RookieInvestor | 19th Dec 24, 11:21am 1734560462

Feb OCR? 0.75 back on the cards? interest to see how markets price it over the holidays.

by Blackbeard | 19th Dec 24, 11:38am 1734561484

...and pump assets (house) prices again! This is the exact reason we are in the doggie-doo now. Mortgages sucking us dry. Banks love it.

by Independent_Observer | 19th Dec 24, 12:04pm 1734563071

Will we ever learn? Or how many more times do we need to whip ourselves before we modify our behaviour?

by Independent_Observer | 19th Dec 24, 11:56am 1734562563

A financial crisis was backed in to be honest (in my opinion). And it has been since about 2015 from keeping interest rates too low for too long. It was about to happen in 2020 (see the yield curve inversion that occurred in 2019) but was masked by covid and the insane fiscal and monetary policy intervention that occurred then - now it could be a real cracker as we’ve essentially gone from 2008 to now without a proper recession - thus has two economic cycles concentrated into one.

The yield curve the last 2 years has been saying something big was probably in the pipeline - I mean it’s been the biggest/deepest/longest yield curve inversion since the late 1920s and that caused the 1929 crash and subsequent depression. Will a repeat occur - probably not because central banks/governments will probably overdo their stimulus again to avoid it but the result will be we amplify the issues we already have - ie they will create more the problem - too much debt relative to productivity. Rich get richer. Young people don’t buy houses. Don’t marry and have kids. We import more of the 3rd world to keep population growth alive. Living standards deteriorate. But at least we avoid a technical recession/depression - even though everything gets worse in terms of quality of life for the average person in society compared to 20 or 30 years ago.

by ChrisOfNoFame | 19th Dec 24, 12:21pm 1734564069

"A financial crisis was backed in to be honest (in my opinion). And it has been since about 2015 from keeping interest rates too low for too long."

Low interest rates weren't the problem in and of themselves. The problem was where the new money created by banks went ... i.e. far too much went in bidding up existing asset prices while sweet f.a. went into new stuff.

No DTIs in 2015. The RBNZ has a DTI now. They better start using it tout de suite ... before the situation gets out of control !!!

(And it will get out of control real fast if FB property 'investor' pages are anything to go by.)

by meh | 19th Dec 24, 12:27pm 1734564468

But we bid up house prices to get the sweet new stuff.

We keep getting into bigger financial crises since '87.

We didn't learn from the tulip bubble or the great depression.

by Independent_Observer | 19th Dec 24, 12:29pm 1734564553

Agree - was saying to people in 2015 that we needed DTIs to avoid issues of concentrated debt in housing - people looked at me Iike I was an insane person.

by ChrisOfNoFame | 19th Dec 24, 12:37pm 1734565029

Ditto ... I tried to show them how commercial real estate is valued. It did not make me popular around BBQs.

by travnz | 19th Dec 24, 11:20am 1734560425

The problem is that while it may be the low point there is still inertia. Going to take several quarters just to stop the blood loss.

by JimboJones | 19th Dec 24, 11:23am 1734560604

Ouch, that is a shocker.

by HouseMouse | 19th Dec 24, 11:05am 1734559526

Abysmal

Economy is in the toilet

Do you still disagree with me Jimbo?

by JimboJones | 19th Dec 24, 11:22am 1734560541

Disagree about what? I thought the economy quite clearly went backwards around mid this year. And from the end of last year I suggested Orr should have cut.

by Millennial_Woman | 19th Dec 24, 11:09am 1734559740

Does this align with the snappy public service cuts post-election?

by huttman | 19th Dec 24, 11:11am 1734559878

The economy is now smaller than it was in June 2022

GDP down is not a problem, but when we pulled more debt in both public and private, it's disaster!

by Thinker | 19th Dec 24, 11:14am 1734560063

That is one horrific data release.

by Idoubtit | 19th Dec 24, 11:16am 1734560170

"and now believes"

This doesn't instill me with confidence. So all commentary has been based on incorrect data and even now it by no means sounds certain as to what the actual position was/is.

The question we should be asking is why is the data revised significantly more than 2 years after the fact? It reeks of incompetence, or a political agenda, if you ask me.

by Grattaway | 19th Dec 24, 11:24am 1734560670

agree

But issue identified (although cause not agreed) what are the solutions as tinkering wont cut it

What is going to give me confidence to invest in productive business here in NZ? - because if there is no change my money is heading offshore - in the same way that the skills currently are

by interesting1234 | 19th Dec 24, 11:17am 1734560240

Economists expected the revisions but may have been surprised by the sharp decline in September.

Better change your profession then fellas (economists). Not sure you could predict the sun to rise at this point.

by safeashouses | 19th Dec 24, 11:20am 1734560454

Nice one Grant Robertson - also RBNZ will hopefully now stop tinkering with the OCR - lets go

by nzlegofan | 19th Dec 24, 11:24am 1734560683

"1.1% in June, revised downward from -0.2% as at the original time of the data release."

What value does Stats NZ add at this point when they can't even measure GDP to the nearest percent? I mean we're making monetary and fiscal policy decision on this data, surely there has to be some level of accountability!

by Matt_B | 19th Dec 24, 1:54pm 1734569648

Stats have issues with "Stats".

https://www.thepost.co.nz/nz-news/360527540/wellington-job-loss-data-wa…

by RookieInvestor | 19th Dec 24, 11:27am 1734560870

if Adrian Orr doesn't do what the government wants can't they just replace him with someone that will?

by Yvil | 19th Dec 24, 11:44am 1734561854

Ouch, not surprising, but that's a seep drop

by boombust00 | 19th Dec 24, 11:56am 1734562563

What does this mean for the residential property market? Down Down she goes. the recovery will be in the late stages of this decade if that. Finally young ones will get a break from this stupidity. And hopefully more young ones decide to continue to live in NZ.

by Independent_Observer | 19th Dec 24, 11:59am 1734562745

Or we do something like Japan and spend the next 30 years with no local population growth, fighting deflation, have to import the 3rd world to keep the population stable, asset prices are flat or falling for years as dropping rates just creates even more deflation.

by mikekirk29 | 19th Dec 24, 11:56am 1734562618

Time a few folks noted that elephant in room is China which in reality has had little growth in 2 years and a bottomless real estate hole giving vicious deleveraging. As that is NZ major export destination it is not surprising Nz economy in hole

by MikeM | 19th Dec 24, 11:57am 1734562623

Mortgage rates in the 4s are on the way.

by Independent_Observer | 19th Dec 24, 11:59am 1734562794

All good as long as you don’t lose your job or your business fails in the interim.

by Zwifter | 19th Dec 24, 12:31pm 1734564694

The people that are in the shit are the ones that will always be in the shit no matter what. Those that forward plan and are focused on small gains over 25 years are the ones that come out the other side successful.

by FCM | 19th Dec 24, 12:43pm 1734565425

100% agree with you there, some forward planning and living in your means goes a long way. You know how many people I know paying 750 plus in rent and they have a new ranger or some SUV...

by Zwifter | 19th Dec 24, 2:08pm 1734570490

Yes most people simply cannot control their spending and are extremely wasteful. You do feel sorry for them however because its quite hard to reverse that Range Rover up to the food bank.

by CN - new | 20th Dec 24, 4:59pm 1734667187

"most people simply cannot control their spending and are extremely wasteful."

Most people are unaware of this - "Too many people spend money they haven't earned to by things they don't want to impress people they don't like"

Most households in NZ are financially illiterate.

by boombust00 | 19th Dec 24, 12:11pm 1734563518

that doesn't mean jack all. Residential Property is done for the foreseeable future. Can't you see the bigger cracks ?

by mikekirk29 | 19th Dec 24, 11:58am 1734562686

If reserve bank cuts too much currency will crash

by VeteranGolfer | 19th Dec 24, 12:10pm 1734563447

It has crashed ! Even against UKPound.

by interesting1234 | 20th Dec 24, 9:36am 1734640605

Good time to be a kiwi in the UK and flick a few quid back to your NZ bank account for the next trip home

by ChrisOfNoFame | 19th Dec 24, 12:24pm 1734564292

Any link between the OCR and the NZD is extremely tenuous. (I get tired of saying this. Quite happy to be proved wrong but no one has yet.)

by Blackbeard | 19th Dec 24, 1:29pm 1734568167

NZ$ not worth the toilet paper it’s printed on. Imports to push inflation. OCR can’t go down any further.

by Grattaway | 19th Dec 24, 11:59am 1734562777

Dan you might need to find someone to do some 2025 policy predictions as my take is that NZ is on track for another year exactly the same as 2024 given the current policy/leadership positions

With the risk to the downside given global uncertainities especially key political ones

by Independent_Observer | 19th Dec 24, 12:03pm 1734563020

Yip the solution to this is going to be a big fiscal spending program but that would cause massive egg on face for Luxon and Willis which will probably be too painful for them to face. So as you say it could take 12 month of pain before they accept/realise their economic plans are going to be a disaster that causes widespread suffering and the loss of the next election.

Our government/debt levels to GDP aren’t they problem - but our private debt to GDP levels are. Just dropping rates to grow private debt to GDP back up to their limits which for us seems to be about 160% isn’t going to resolve anything - it will just cause more of the decay we’ve seen the past decade or more.

by WestieAJ | 19th Dec 24, 12:17pm 1734563822

They need to do something quick or Kieran McAnulty will be Prime Minister by the end of 2025.

by ChrisOfNoFame | 19th Dec 24, 12:41pm 1734565310

No. The solution is a massive overhaul of our tax system.

A "big fiscal spending program" like you suggest, before a tax system overhaul, will simply repeat the problems of the past. I.e. some will end up in the right places but most will end up in the wrong places. Or put another way, our tax system encourages all the wrong places.

by itsme | 19th Dec 24, 12:30pm 1734564605

For political reasons this Government gave everbody tax cuts, then borrowed to pay for it.

Not much better than the last lot.

They seem to be pandering to lobbyists and politcal donors to the detriment of most NZers.

Money should be chanelled to productive enterprises, not housing.

No country ever became rich by buying and selling houses to each other at a higher and higher price

which has been encouraged by this and previous governments through tax incentives.

by ChrisOfNoFame | 19th Dec 24, 3:00pm 1734573622

100% agreed.

by The_Golem | 19th Dec 24, 12:39pm 1734565177

I'm almost afraid to ask, but does anyone know the per capita GDP figures?

by Blackbeard | 19th Dec 24, 12:47pm 1734565628

Probably a fat zero. I look around, I see poor people.

by M0ralHazard | 19th Dec 24, 12:56pm 1734566199

https://www.stats.govt.nz/news/gdp-decreases-1-0-percent-in-the-septemb…

GDP per capita fell 1.2 percent during the September 2024 quarter. This was the eighth consecutive fall in the series.

by The_Golem | 19th Dec 24, 1:11pm 1734567082

Thanks (I think). We're a bit stuffed, aren't we?

by kiwimm | 19th Dec 24, 1:27pm 1734568025

GDP per capita down 1.2%. These are the last 6 quarters for GDP/capita:

-0.1, -0.7, -0.3, -0.1, -1.3, -1.2

Pretty grim reading

by ChrisOfNoFame | 19th Dec 24, 2:01pm 1734570084

Agreed. I'm beginning to think it's time to sell up a few bits and bobs, and move overseas.

When things are in a terminal decline, it's best not stay around for the end.

by ex agent | 19th Dec 24, 12:46pm 1734565580

This incredible backward move by our 3rd world economy vindicates those who have gone overseas or are about to go overseas. What a bloody disaster!

by Blackbeard | 19th Dec 24, 1:22pm 1734567722

House prices will save us. Yippy….not this time!

by Toye | 19th Dec 24, 12:57pm 1734566238

Orr is now between a rock and a hard place. He can't keep the OCR too high as the economy will crater but on the other hand if he drops the OCR a lot the currency will crater and inflation explode. This will also kill any tiny bit of confidence gained from the cuts over the last few months.

Either way no good going forward.

by M0ralHazard | 19th Dec 24, 12:57pm 1734566268

I don't think he cares as long as CPI stays between 1-3%

by Toye | 19th Dec 24, 12:59pm 1734566354

In that case OCR cuts will stop and the economy will continue to scrape along the bottom for a while yet.

Housing market dead and buried.

by Northern Lights | 19th Dec 24, 1:04pm 1734566642

I haven't seen a great deal of problem solving in the comments so far. As far as I can see from a technocratic point of view the solutions are fairly straightforward.

Dairy prices are rising, China is in a holding pattern rather than collapsing - this is somewhat good news for our exports. The fiscal downdraft is coming from the govt and the RB's contractionary interest rates.

The govt needs to get together with the Reserve Bank and agree to increase govt spending and reduce the interest rate. They should do this quickly.

Act should go along with this in exchange for making a meaningful change to the way local govt works.

Part of the increase in govt spending should be to subsidise local govt infrastructure spending which is badly needed, but the quid pro quo needs to be a reduction the council paperwork and a reduction in the costs of getting anything done.

The RMA has gone way beyond letting the neighbours and the iwi have a say in the development next door and has become a method of extracting money from people trying to do something to the point where most developments are unviable without very low interest rates and very high property prices.

You can't unwind that sort of system suddenly without causing permanent economic damage and long lasting scars. So you have to do it gradually with the state cushioning the blows.

It is easier to bring in a capital gains tax or a wealth tax but this means that middle class wealth is destroyed, the 1% get even richer (because they have the resources to avoid the wealth tax) and increases in productivity are very hard to achieve while the local bureaucracy still is allowed to have such a stranglehold on economic actors.

by blobbles | 19th Dec 24, 3:05pm 1734573905

The problem solving is structural change in our economy. Away from rentier behaviour (that requires tax changes). Away from property speculation (also tax changes and rules governing financial institutions). Concentrating on growing productive enterprises (thats changing tax systems and significantly increasing R&D grants, startup funding etc etc). Investments in infrastructure, in a huge way, knowing that infra will never be cheaper to build than right now AND it is a catalyst to smooth all of the above.

But all of that requires long term planning, thinking and political cycles to encourage long term thinking. No government wants that, they are only after "quick wins". If they did want the above, they would have been doing it for the last 30-40 years and we would be a far more prosperous nation. Instead the short term thinking is bringing us to our knees.

by FCM | 19th Dec 24, 2:02pm 1734570136

Yeah get infrastructure up and running again, BUT cut all the red tape, cut the woke middle management and leaches of consultants, the PC gone mad cultural departments and put the money straight into the materials and labour, get that money moving. Oh and MAKE sure the companies that build these pay TAX in NZ.

by HouseMouse | 19th Dec 24, 2:26pm 1734571619

Many of us have been commenting on the necessary solutions for years….

there’s been no appetite from either the blue clowns or red clowns, nor from the electorate most of whom are ignoramuses

by agnostium | 19th Dec 24, 11:58pm 1734605904

Here you go HM. Are you happy KO will be building 1000 less homes next year?

https://www.oneroof.co.nz/news/kainga-ora-axes-60-of-social-housing-pro…

by interesting1234 | 20th Dec 24, 9:40am 1734640844

I voted TOP. At least an LVT and meaningful restructure of the tax brackets would have helped us have spare funding for the essentials and taken some incentive out of property investment/accumulating assets. If only the masses understood.

by Piggy | 19th Dec 24, 1:10pm 1734567039

Faster and deeper rate cuts are coming to 2025!

by Blackbeard | 19th Dec 24, 2:49pm 1734572972

Won't help, 80% of bank leading coming from off shore. Dropping OCR will crash the kiwi$ making imports/gas expensive, cost of living / inflation worse.

OCR is close to maxed out now.

by bdogg | 19th Dec 24, 2:31pm 1734571906

Yep - the data release is good news, now a .75 cut in Feb will be favourite in the betting markets.

"You know that big interest rate cuts aren't a good sign??"

Yeah, we know. We have been living through hell for the last year you donkey.

Finally the infection will get some penicillin now that the blood test results are in.

by Thats All Folks | 19th Dec 24, 4:38pm 1734579515

Spoken like a true (debt) junky…

Just one more hit, I promise this is the last one!

by bdogg | 19th Dec 24, 8:42pm 1734594140

Or a business owner who wants customers to spend money, or a pensioner who can’t pay their 200k mortgage, or a fhb that can’t service 6% interest on top of extortionate food and rates.

But yeah you and your term deposit tunnel vision is all you can think about (no one cares) looolll

by Chaosinflesh | 20th Dec 24, 5:30am 1734625808

Q1. Why does a pensioner still have a $200k mortgage?

Q2. Why can't a FHB afford 6% interest rates on their mortgage?

A1 & 2. Poor financial planning with little consideration of the future leading them to take on more debt than they could handle.

I note you also missed the struggling owner-occupier who used their house as an ATM and now sits tight, or the rentier in negative cash flow dreaming a new tenant will pay his money-rent to the bank.

NZ is addicted to debt, and until that is cured any hopes the business owner has in the current economic climate of increased spending is simply wishful thinking.

by interesting1234 | 20th Dec 24, 9:42am 1734640950

They we'll find out there's gangrene as the infection was cause by our diet of unproductive investment and the penicillin (reducing OCR) only gave us a false sense of confidence that the infection would subside.

by HouseMouse | 19th Dec 24, 1:49pm 1734569391

Good ole Liam, the cherubic face of the ponzi machine, telling us to not panic:

https://www.nzherald.co.nz/business/liam-dann-dont-panic-about-worse-th…

by CN - new | 19th Dec 24, 3:07pm 1734574068

The bigger the party, the bigger the hangover.

Remember that the nominal value of house price falls in NZ since the peak is over 75% of GDP.

by Dale Smith | 19th Dec 24, 3:56pm 1734576965

Labour were classic broken window theory in thinking that the increase in GDP caused by a glazier having to fix a broken window and the extra employment by Police to find who did it are as beneficial to the economy as if those things did not happen and the owner of the now non broken window has money to save or put into more productive uses.

Hence many of the "broken window' public services jobs had to go.

Time is now needed for those savings and other policy initiatives to follow through and be put into the real value added productive economy.

by agnostium | 19th Dec 24, 5:21pm 1734582085

This the coalition playbook. The results will likely be the same.

https://en.m.wikipedia.org/wiki/United_Kingdom_government_austerity_pro…

by agnostium | 19th Dec 24, 5:26pm 1734582397

In spite of the hopes of proponents of austerity, wages in the UK have remained stagnant since the recession.[86][87] After accounting for inflation, wages had declined to 2005 levels by 2023.[88] As the minimum wage continued to increase while overall wages were stagnant, the proportion of workers in minimum wage jobs increased from 4% to 10% in the decade to 2018.[89] The gender pay gap narrowed over the course of the austerity period from 22% in 2009 to 14.3% in 2023;[90] due to a decline in the wages of low-paid men, more of whom were on the minimum wage by 2023.[91]

The productivity of the UK's economy has also been largely stagnant since 2007, with the UK's decreased growth in productivity since the financial crisis being worse than other advanced economies, from 2007–2024 the UK economy experienced the fourth highest growth of the G7.[92][93][94][95][96] Productivity began to decline again in early 2022, which tipped the economy back into recession in 2023.[97]

by ChrisOfNoFame | 19th Dec 24, 7:37pm 1734590226

This would have 'growth positive' spending ...

https://www.oneroof.co.nz/news/kainga-ora-axes-60-of-social-housing-pro…

Might have kept a few kiwi builders in NZ too.

by Gasmanz | 20th Dec 24, 11:22am 1734646921

Surely, it's time for the Reserve Bank to cash in some of its foreign reserves to steady the currency during these volatile times.

"By holding and using foreign reserves when needed, we can make sure there is global confidence in the NZD and wider New Zealand economy."

Foreign currency reserves - Reserve Bank of New Zealand - Te Pūtea Matua

by CN - new | 20th Dec 24, 2:43pm 1734658992

"Surely, it's time for the Reserve Bank to cash in some of its foreign reserves to steady the currency during these volatile times."

Central bank reserves are small relative to the size of the market. Need those foreign reserves to pay for imports and foreign currency debt maturities. If the central bank runs out of foreign reserves, then they will need a loan from the IMF and there will be conditions to their loan (like a normal loan from a bank)

Look at other countries which ran out of FX reserves which took loans from the IMF, look at the extent of their currency devaluation beforehand.

When confidence in the currency is lost, there is a rush to sell the currency and very few buyers of the currency resulting in currency devaluation.

Look at Argentina.