It's 2016 and time to look forward.
The purpose of this story is to provide a place where readers can prognosticate; what do you think will happen to our economy in 2016 ?
More specifically, where will interest rates go in 2016 - and why ?
This is also a place were you can give us your views of what will happen to property prices in the coming year.
My personal view is that 2016 will be a year that allows the US Fed to raise its rates four more times from the current 0.5% to 1.50%. I predict it will do that despite some bumps in the road and that markets will come to like the trend and find ways to profit from the moves. But I don't think they will unwind any of their QE in 2016.
The biggest bumps will come from the bond markets and rising rates drive bond price falls. Not huge ones, but the days of bond price gains will seem to be over. What will be rocky will be the pounding junk bond markets take. But I think the Fed will see that as necessary pain to get back towards more normal interest rates.
In New Zealand interest rates won't go any lower in my opinion. In fact, my guess is that Graeme Wheeler will be talking about raising them again toward the middle of the year.
I also don't see our currency falling any further. In fact, 2016 is election year in Australia. It must be held before January 14, 2017 but their new Prime Minister is a risk taker and he will call it early, about September. He will campaign on structural reform, winning his own mandate on the basis of some soft platitudes in the face of a worsening budget deficit. Then he will try to act on his program. I see the AUD falling in the turmoil and the NZD rushing up to parity in the December quarter.
But enough of my guesswork.
This story is to encourage you to record your own 2016 predictions.
They can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international trade negotiations. But please try to ground them in the economy. (For example fashion or celebrity comments are not relevant, but climate change issues are.)
You will need to be logged in to comment and respect our commenting policies (and respond to others' differing views in a respectful and civil way).
Over to you.
86 Comments
Yes another year of propping up is likely internationally. Fed increase will be reversed.
NZ housing market:
The huge number of people who had mortgage approvals granted in the last three weeks will go on a spending binge early in 2016 and we will see a record price surge in Wellington, Hawkes Bay, Waikato, Bay of Plenty and Northland regions.
Auckland housing market:
Another year of 20% + house price inflation due to migration gain, low interest rates and lack of new construction. Chinese foreign buyers back in force from March onwards.
Migration:
Net migration gain of 90,000 for 2016 most of those arriving choosing Auckland as their new home.
Interest rates:
OCR cut another three times and 1 or 2 year mortgage rates well below 4%
Exchange rate:
A strong year for our currency with parity against $AUS.
Commodities:
Fonterra will see the payout cut further as the Russian/Chinese dairy consortium ramps up activity.
Here they are
On 18 December 2014 David Chaston invited you to record your predictions for 2015
http://www.interest.co.nz/opinion/73334/your-opportunity-record-what-yo…
this year i tipped a bear market by the end of the year and was wrong, so will make the same tip must come right sooner or later
FED will only lift twice then have to stop
NZ Government will start to lose ground on housing affordabilty as people lose patience that they actually have any solutions
NZ debt private and public will continue to grow and there will be warnings from afar IMB, IMF ,rating agencies ,that it is too high needs to be reigned in
if national fall below the margin needed to safely get relected in 2017 JK to retire take a knighthood and head off to some cushy job somewhere
Not enough meaningful action will be taken by enough countries and global heating will continue towards the dangerous tipping point of 1.75 - 2.25 degrees C. Many will continue to confuse weather with climate and historical rates of change, justifying inaction in their own minds.
RBNZ to cut in 2nd meeting due to increasing NZD. Fed to rise 4 times. BoE to rise at end of Q2 start of Q3 but only once this year.
Dairy will stay as it is for a while. And I think drop again during Q2.
China will keep slowing. Auckland average price will top 1 million.
2016 - Geo Political Forces
Milk will continue to founder
The economic sanctions by US and EU against Russia will continue which will force Russia-China further into one-anothers orbit on a greater scale with implications for milk - Russia will negotiate plans to supply oil and gas to China in exchange for agriculture and milk and dairy products - Russia will increase it's tragectory of food independence away from Europe
Fonterra will continue down the commodity path
Immigration
Migration from USA will increase somewhat as climactic climate events continue to ravage some states as residents in subject areas re-evaluate their loyalties to one particular place and gravitate to other more benign places while some with the financial capacity to move to the South Pacific will do so
Migration from European-EU countries will increase as the social and financial pressures arising from the flood of inbound refugees from the middle east are absorbed
Resulting in which
Housing
Auckland House prices will not collapse, government will dither around and announce further grandiose feel-good never-never plans which will have a 10 year lead time, or, never come to fruition
Infrastructure and social services
Will continue to struggle as the government fails to capitalise on the migration dividend (in the current electoral cycle) (ie charge stamp duty on purchases of property by people who are not NZ citizens or who have been in NZ for less than 5 years) paid into an infrastructure fund or into the NZ Super Fund
Australia
Quite probable that conditions in Australia will become harsher as the economic effect of the dramatic decline of the mining and ore-extraction sectors accelerates the reversal of migration between the two countries.
Housing.....supply and demand factors control house prices. If you want the price of anything to fall just oversupply the market and the price will drop..i.e. Build more houses.
Adding stamp duty for foreign buyers just stops them investing in our country and opens the door for the next step which might be to apply stamp duty to ourselves as an easy tax income for governmrnt.
Magic
So, in your analysis, building more houses will somehow magically meet the immediate additional infrastructure demands that the flood of migrants place on existing utilitites, roads, motorways, services, education, schools, health, hospitals, welfare, energy, without paying for the expanded demands they create
Investment in new millennial businesses that create jobs we need
Investment in housing WE don't need
Total new housing numbers built over last 5 years has been out-numbered by migrant numbers
We have been building flat out just for their benefit
Well there is no magic involved , it is much sompler than that. If you have a shortage of any product in demand then the price of that product will rise as we have seen with housing in Aukland.
Ok so if you do not want to fix the supply end of the equation by providing more homes then attack the demand side by stopping migration into NZ.
Unfortunately that too has many downsides since demogrphically we ourselves are an aging population we will need younger migrants to keep the economy running in the future. There are no easy answers to the problem.
I agree that the outlook is bad for Australia. - Long term it's potentially disastrous with climate change, (man made or otherwise). We should act now to end the right of NZ residence to Australians. Given the way they have treated us since the 2001 changes, I would no longer feel obliged to take in 20M+ Aust. refugees.
US High Yield to be the canary in the coal mine. Watch it continue to blow up, destroying wealth and making weak companies dependent on refinancing - highly dilutive equity will be required or simply companies folding (esp Oil & Gas and natural resource sector)
As a consequence potential for the Fed to hold rates flat throughout the year
Tiwai Point to permanently close, sending shock waves across NZ's energy generators
NZ dollar to remain preferred safe haven currency, regardless of interest rates. Expect more foreigners buying NZ farming assets as a method to park money in assets neutral to monetary policy
Australia's property market to somewhat blow-up. As unemployment from the mining sector and construction sector finally trickles through. More kiwis return to Auckland. Potential for NZD to head towards parity with the AUD
DonKEY and Bill deliver a nice fat pre-election year budget largely satisfying old people and Aucklanders (the rest of NZ is irrelevant)
Potential for political upheaval in Russia, Iran and Saudi/UAE as the effects of low oil continue to rage
All Blacks to retain the Bledisloe
Not really predictions but more like what i hope for
1 .HNZ continues to pay dividends,
2 RBC sort their rubbish out and this is reflected in a sharp price rise,
3 People that are selling a business will answer their Emails promptly rather than answering with a SORRY WE TOOK SO LONG.You either want to sell or you don't.,
4,Winz decide to pay an allowance to me despite having money in the bank.
4, that is something I hate. When my son was born we were in very tight finacial circumstances, with both being out of fulltime job and parental leave not even covering the rent. but no help for us because we saved hard earlier on so we had some money in bank (10000 is enough not to get subsidy)
A colleague had a kid same period, similar circumstances but no savings (money spent mostly on dope and motorbikes) so he was getting money from state. fair is it?
NZD to plumb new depths against the USD, falling to 50c or lower by August. It will then start going back up again.
El Nino causes rising food prices worldwide in local currencies.
The above two cause inflation to unexpectedly rise (unexpected by the RBNZ that is) and the RBNZ will continue to not know what to do about it or anything else. They will muddle along as usual.
Bill English will be surprised to find he can manage some tax cuts in May. Tax cuts take 12-18 months to improve the economy and politicians do seem to like to win elections.
So we just start to break even and BE removes that surplus in order to fund a tax cut for the well off who dont need it? (and who will probably invest it in housing which is the last thing we want). This would be very George Bush....and it failed BTW. However do you think Labour and the Greens are electable? even as a green party member, I dont think so.
What will cause the NZD/USD depths to be plumbed? realisation there is going to be a sustained milk price collapse? certainly that seems probable.
El Nino, maybe, interesting point to watch. I bigger one that worries me is the low oil price triggers riots / civil wars in the oil producers now that sure would upset things.
Ha, well these are predictions after all, what might be. The NZD/USD is because I think money is still flowing back to its makers. That is, it's more about the USD rising against all currencies than against the NZD as such. USD will get precious as their high yield junk corporate bond collapse gathers momentum and should be interesting to watch. This will suck USD from the rest of the world in a self-reinforcing process.
Personally I like Bill English and I think he is good at his job. He is most assuredly not George Bush, thankfully. Or Tony The Gullible Tyrant Blair either for that matter. We have had, and will have, far worse Finance ministers. Not that I entirely agree with everything he does, mind you, I think we should have full employment then budget balance. From my point of view a budget deficit puts money in the private sector whether its from tax cuts or extra spending. How the tax cuts are structured determines who benefits most. His last set of tax changes favoured earned income over property income as he took away the deduction for depreciation on buildings. It favoured high earning lawyers.
Yes, the Arab Spring was more about soaring food prices than anything else. There are an awful lot of people in the Middle East dependent on oil income. Syria population, for example, grew from 2 million to 20 million over the last century. Egypt went from 10 to 90 million. Saudi from 2.5 to 30 million.
First para, yes, yet not yet. IF the Fed continues to rise and honestly I hope/think not then we could indeed find ourselves in deep doo doo as the money we need to borrow bleeds away. The US's high yield is bad as here,
http://www.bloomberg.com/news/articles/2015-12-28/u-s-companies-led-the…
BE I dont consider competent but then I do think that of most pollies, if not all. "I think we should have full employment then budget balance." very much agree, if only because those working pay more tax and then it balances.
Debt will cease to be an issue.
Interest will rise.
Governments will Guarantee it!. What else can Banks demand.?
They have screwed and printed like MAD-off. Then claimed a fowl and the Governments are chicken.
A pox on all Financial Theorists. I believe it is all a plot to build Houses.
A Happy New Year to all our readers.
Long may it rain in some places, pray for it to cease...in others.
Sorry to be negative. ...we get what we pay for ...in this World.
The Black Swan event from last year for which the nearest possible occurrence was continued dairy price falls, was ignored by Mr Market.
However when 83% of farmers like what the Gummint is doing (presumably based myopically on continued low interest rates) a real chance arises that the high perch on which roosters Key and English sit will be shaken vigorously.
Another 60000+ migrant will leave Nick Smith without any excuses however hard he tries.
How an ex professionally qualified engineer (a profession which demands absolute accuracy of facts unlike lawyers and accountants) can keep coming up with excuses beggars belief.
In January, our shameful rates of domestic violence will drop to nothing.
Later that month, our threatened native flora and fauna will recover and flourish.
Around mid-February, our agricultural sector will start to consider what values young, educated, wealthy consumers are looking for.
March will see the meth-amphetamine trade dry up.
On the 10th of April, no more children will be going hurt and hungry to school.
In May, we will no longer price our children and grandchildren out of owning their own homes.
June will be the month when teenagers no longer need to get out of their heads on alcohol to have a good time.
In July – in probably the second week – the tens of thousands of highly educated NZers who have taken their skills elsewhere will see a reason to return.
Also in July, our political leaders will learn that measuring growth is not the same as measuring social well-being.
By August, our rivers and lakes will no longer be treated like sewers.
In September, our prisons will be regularly turning out rehabilitated, responsible citizens.
On September 19th the food industry for no reason at all will stop poisoning our children.
In October, greed, envy and blame will mysteriously evaporate.
November will see the end of exploitative wages for immigrant workers.
December, the last possums will have a cage in Te Papa.
1. There will be demonstrations in the streets against rising rents and the Govt will bring in more rules for renters and landlords.
2. The Auckland property market will continue to be strong but at a lower level.
3. Commercial yields will continue to fall thereby increasing values.
4. The Labour Party will change leaders again.
5. Interest rates will stay where they are, with maybe one more down tick
6. Real estate agents will see the wisdom of advertising properties and giving the estimated price range for each.
7. Immigration will continue to be strong.
8. More developers will go bust trying to build the impossible-affordable houses
I am suprised NO one has mentioned the most important thing - the TPP
There will be an upset in the American presidential elections and the TPP will be put back further.
Dairy prices will continue to colapse so there will be nothing in the TPP for NZ anyway.
By the end of the year interest rates will be were they are now or lower.
David Cameron will postpone the referendum on the EU for fear of loosing the vote.
There will be widespread civil unrest in the EU.
All hell will break loose in the Middle East causing a sharp increase in oil prices.
China, now that it has passed its terrorist law, will get involved military in the Middle East.
The DOW wont go above 18300 and may even decline.
Phil Geoff will become Mayor of Auckland and sell assets in 2017.
The NZ dollar will be lower than it is now.
The American real GDP for the whole of 2015 will be about 2%.
There will be a leadership challenge in the Labour party.
China will continue to run into problems with it's economy.
China suspends forex business for some foreign banks: sources
http://www.reuters.com/article/us-china-currency-banks-idUSKBN0UD08D201…
But the point here is that China is not some kind of one-off aberration. In fact, the less visible aspects of the credit ponzi exists throughout the global economy and they are becoming more visible by the day as the Great Deflation gathers force.
As we have regularly insisted, there is nothing in previous financial history like the $185 trillion of worldwide credit expansion over the last two decades. When this central bank fueled credit bubble finally reached its apogee in the past year or so, global credit had expanded by nearly 4X the gain in worldwide GDP.
http://davidstockmanscontracorner.com/now-comes-the-great-unwind-how-ev…
Governments will take over from banks and only issue money [and immediately print a reasonable amount to be spent on the countries infrastructure [with NO real cost to the country!]].
[And build a whole new city at Huntley]
Governments will dismantle 50% of the civil service by paying everyone "the bottom line" to live on (instead of a myriad of different benefits - people can choose to earn more than that if they choose to [see Finland trial]).
Governments globally will halve all debt [it's not like it's even remotely payable anyhow - so stop kidding yourself and be honest about it - HIT RESET!].
No one will be paid over NZ$300,000 in a salary/bonus package; if you want more money start a business!
All idle money (over NZ$500,000), sat in bank accounts [not invested in businesses], will be taxed at 50%.
Governments impose a cap of 3.5x Main Earner salary for any mortgages thus capping house prices in an instant AND allowing the "partner" to do, what is probably the most important job in the world, which is bringing up the children.
The UN gives away power over ALL environmental long term decisions to a groups made up of the most brilliant minds on the planet [with a budget].
The first jobs of this organisation is to look at:
The meat industry
Thermal solar
Saving The Rain Forests [deploying UN troops if required] & the fires in Indonesia etc.
Establishing a court to try Environmental Criminals with prisoners to server time in Russian prisons.
After El-Ninio is over all the weather events will return to normal (after all; now we have a runway of denial as its 100% El-Ninio then La-Ninio right).
Governments globally adopt a 1 child policy [the planet is already too over populated] and impose a parenting test.
Robots will not be allowed to take over all the jobs.
USA, China and in fact most of the world will produce real data based on the truth.
USA will actually create a real, non part time, job that does not pay minimum wage since 2008.
USA will stop "freeing the shit" out of countries to get their oil....
USA/India will bringing water from the Arctic to fill the aquifers (that ONLY refill from rain water) and carry on pumping every last drop of water out of every well [the just drill deeper wells in a better my neighbor approach so far]!
Turkey will stop getting one over on USA (bombing the Kurds not ISIS) and stop buying ISIS Oil.
3 new star wars technology inventions will save the world from cooking itself.
Jon Key (and National) will stop pulling pony tails and become interested in the environment.
People started returning to have surgery and stopped being sent home to die as 100 New Antibiotics were suddenly invented by those organisations that had their patents extended to 20 years by agreeing to a "fair price" cap (see TPP; OMG we have to pay more for medicine).
Peace broke out globally and all wars stopped overnight.
A blue-green party is launched in NZ and it doesn't win by a landslide!
Economists starting adding finite resources to GDP
Economists starting adding environmental costs to GDP
some Economist, somewhere on the planet, will do a forecast that makes it over 50% correct...
TRUMP wins....
and, finally, people stopped being so gullible and pigs will start flying.
Happy new year!
US will continue rate rises allbeit slowly, only two rises in 2016. Will continue to bluff their way through it.
While world races to devalue their fait currencies USA pressures vassel countries in EU into more agressive sanctions on russia. Russian rout US in middle east with expanded presence in Jordon and Iraq.
USA freaks out and israel is forced to expand a DMZ into jordan siting ISIS as excuse. No actual war reqired.
1. Oil drops below 30 usd barrel.
2. NZD drops to 0.60 usd by July.
3. Euro troubles continue, below parity.
4. Trump makes the whitehouse.
1 and 4 dont seem long odds.
1) Some ppl are betting on oil at $20USD, even $15USD.
4) Most pundits/VIPs etc dismissed Trump as a no hoper and here he is a (if not the) front runner. Now can he beat Hilary? It seems some hate her with a passion so might swallow a dead rat and vote Trump!
PS lets say Trump wins, the results of this globally would be be? ouch...
% on him winning v Hilary? 20/80? that's about my odds.
Since we have a Republican congress and Senate, yes I think his tax cuts for the rich to start with would be a non-issue. Obamacare would go, he'd bomb iraq and syria for the oil. CC would be dumped. Oh and many in the GOP are tea party, just a perfect match IMHO so I dont think he'd be a lame duck at all internally. Now whether the other developed countries would go along with his foreign policy (which seems to be to bomb ppl) is another issue.
Shiller thinks we are headed for more trouble and that, by and large, Central Banks will be to blame:
http://www.dailymail.co.uk/money/markets/article-3379378/Market-oracle-….
China has to be the disaster waiting to happen and without Rule of Law or a civilized constitution, the social fall-out will be shocking when it happens; but in 2016, I don't know.
Things look pretty good for NZ - and could be even better if our looney Pollies would just get out of the way with their constant fiddling.
Trump will implode, Hillary will lose her momentum and Rubio will become President. with Hillary accepting the VP position.
Oil will go up to $70 per barrel.
USD will slide by 15%
Aussie economy will go down more, pushing up NZ as an attractive destination for migration, making
Aussie the back door entry to NZ (Understand that already many PR holders in Aussie are coming in here, with automatic PR status given by NZ...though why they should get that escapes my logical mind)
BRICS will lose couple more bricks to bad performance.
Europe will sink further into anarchy and that will be the big spoiler in the stock surge.
The UN Security Council will be expanded.
The world wide drought will push up commodity prices.
Another conflagration in the Middle East, leading to more instability for the next few years.
House Prices won't weaken in Auckland.
NZ flag will be changed.
TV3 will be taken over by Prime/Sky.
Nobel Peace Prize will be abolished.
West Indies will climb the ranking to top Cricket position.
NZ will continue to dominate Rugby.
Tax cuts and rate cuts will bring back inflation to NZ.
lets be daring. Another year of no core (no, not CPI) inflation, ie <1.5%. and probably under 1.0%. CPI, maybe 0.5% higher.....maybe.
As a result I think the OCR will stay low and probably go lower 1, maybe 3 cuts threatening 2% this time next year. If anything major happens then 1.5%....
There will be five separate OBR events triggered. Haircuts will range between 10-60% of unsecured deposits. One of the Aussie four will cease trading in NZ. Flood events will cause more than one insurance company to cease trading and the government won't do a bail out this time. Two of the LGFA members will default on their loans and the rest of the members will be bailed in. Fonterra will receive government assistance - the nature of the rescue package having a suite of regulatory and ownership/structural/managerial changes attached. It won't recover.
I fear this. An OBR event implies that house prices have dropped and people are losing their jobs. Is this likely to occur in 2016? In my view NZ will still be seen to be the lifestyle/safe haven. But it may do so in 2017 when the housing supply really comes on strong and when the govt in power at the time finally acts on cutting this useless immigration. Builders will then out of work. Mortgage and real estate industry slows right down. People going to Oz especially the recent immigrants who have no real tie to NZ.
Is this likely to occur in 2016?
My guess is it will be another global shock - and we won't be spared - as we largely were post-GFC circa 2008/09, thanks to EQ-CHC, dairy to China and the flood of hot money from China. And if credit flow freezes/dries up again, I think it could also be that the US FED doesn't open a window again to the world ... perhaps to a few select 'friends' but I think NZ's financial sector will not be spared - rather the aim here for our institutions will be takeover/global consolidation.
None of the same local conditions we saw last time are likely this time (EQ, dairy, floods of ill-got gains ex-China). There will be purchases of land at fire sale prices from Chinese interests, but they will be government-owned entities.
Just predictions, of course.
I agree, but while at some point I do see OBRs (and since all of the big 5 are in effect monolithic lending, yes 5), for these to occur in 2016 just seems too compressed a timeline? So an OBR would imply huge if not staggering losses (20%+?) in asset values of housing and farms, which I think would take some time to work out?
UK is currently facing some of the biggest insurance payouts for the floods and the El Nino isnt over yet, so how and what happens to [re-]insurance will be interesting. I do not think insurance companies will cease trading but I think we'll see severe restrictions (or huge costs) on what can be insured. So for instance at some stage large areas of housing may become un-affordable or even un-insurable. Just how those areas will be determined is going to be interesting, so if the Council's declare such zones they will get sued? so it has to be by the Insurance companies themselves? oh boy.
Fonterra, yes I can see that as well...
@ Stephen A housing bubble bursting following an OBR or for any other reason could result in losses well in excess of the 20% you suggest..and you are quite correct it will take years to work out. Spanish property is still in deep doo doo while the Irish market has improved but still not returned to where it was pre crash.
Beyond 50% as was seen in both Ireland and Spain when things went bad with the banks and nobody could borrow to buy. Property sitting without buyers for years even at giveaway prices as nobody had access to funding....could happen here. Property market here already looking like a bubble in places.
Yes lets pick the past
We would like 19th March 2014, 365 times.
http://i.stuff.co.nz/national/politics/9847806/Chinese-leader-to-visit-…
The meeting also saw the formal approval of a new target to raise two-way trade between New Zealand and China to $30 billion by 2020, although the release announcing the target was accidentally distributed to the media almost an hour before the meeting took place.
"I think that's eminently achievable," Key said after the dinner.
"But as President Xi said when we were having the discussion, that just means China's got to drink a lot more milk, and they're up for that."
As for 2016. We don't see Vlad taking any prisoners, but president 11 probably more.
The most interesting point I will be interested to find out (pun intended) is what happens with the FED rate hike. We are in a long term down trend in interest rates and the recent rise is still within the confines of that trend. Question is can it be maintained until the end of the year as liquidity dries up. I would not count out another rise in the meantime however.
New Zealand has a 50/50 chance of holding or cutting another .25, primarily driven by milk price issues. Currency should keep falling for the same reason. Logs as perhaps a secondary driver.
The risk of a black swan even is higher than 2015. I recall when first coming on to interest.co.nz after the GFC that 2016 featured strongly as a significant year for the recovery strategies to lose their potency and structural problems to appear again.
Too early to call the Auckland house price market I think David. How about you ask again mid year? My father just sold his and I thought the figure was a bit light. He has helped inflate another province by buying there and intends to spend the balance on travel before he kharks it.
The USA will keep slowly retracting its tentacles from world affairs and become internally focused. But their naval dominance will mean the empire endures.
In short I see breathing room running out, but there is still enough room to keep things ticking over for another year.
Oh, how could we miss this one.
Hellen gets elected top dog for UN, december 2016.
Thanks for selling out NZ to get there Hellen.
Carbon Emmissions tax, Massively increased state dependancy, legalised prostitution, crap 'free' trade deals, homosexual 'marriages', sold out airforce fighters and gutted the army, Feminised the education system ...etc...etc...
Good luck UN.
Assuming El Nino causes food shortages, then some real stress will be felt in the world, especially highly populated poor places. The middle east looks especially vulnerable, with Egypt likely joining Syria and Iraq as a real problem. Saudi might finally have to confront its deluded interpretation of its religion, with no oil price buffer to have the US hold its back. Pakistan, India, Indonesia, Brazil might all feel the pinch. The Olympics in Rio could be forgettable.
Presumably the Fed will raise interest rates by 1%, and that will have contractionary impacts worldwide. Hopefully the world's central bankers will work out finally that direct printing of money to fiscal deficits is the best way to generate global demand in these circumstances, with the least undesirable consequences. Lowering interest rates has been a spectacular distortion on its own, without really lifting consumer demand. Just maybe pending US elections and a perceived "war" footing over terrorism, refugees and food shortages will prompt some real monetised government spending.
In NZ life will continue to be okay for most. Tax cuts are likely, hopefully funded by printing, rather then exchange rate damaging borrowing. Interest rates probably won't go lower. The exchange rate will remain too high, but the populus seem to prefer that. Builders will be busy building houses in Auckland for foreigners, and in the Bay of Plenty for Aucklanders. Farmers will struggle through, with probable lifts in milk prices offsetting lower production due to drought. Phil Goff will be mayor of Auckland.
We'll vote in the new flag, and win 3-4 gold medals at the Olympics. The Blues will finally make the rugby playoffs.
New flag? No. I think the committee made a mistake in putting forward the black and blue fern. Too similar to the red and blue one. But not as pretty. There will be many thousands out there who put the black and blue one second only in order that the other not so good ones (in my opinion) didn't get a look in. But with the depressing black on the selected one, I think many who did what I did, would not want to chose that one over the existing one. If there had only been the red and blue one on the original list it would have flown in....
We are not "building houses for foreigners"...that makes us sound racist, we are building houses for profit, our own profit.
Our builders are employing thousands of New Zealanders supporting those NZ families with a good lifestyle thanks to foreign money coming into New Zealand to pay for it all.
I see that many of us resent immigration but we do need inward investment. The immigrants do have a cost of course on all our infrastructure requirements etc but the cost of producing the educated immigrant, a doctor for example has been borne by their own native country so there are pluses and minuses for sure.
@ uninterested.
Hope they are paying their taxes like all good New Zealanders and not claiming benefits.
My next door neighbour makes cement blocks. He is a New Zealander and very happy as he cannot make enough of them to meet demand and has been able to buy a very nice property himself albeit with a mortgage. The local microeconomy stimulated by the building industry is considerable.
Some other predictions,
lawsuits?
http://www.forbes.com/sites/francescoppola/2015/12/31/in-europe-2016-wi…
bail ins?
http://www.telegraph.co.uk/finance/economics/12076186/Europes-trillion-…
Some more,
http://www.theguardian.com/world/2015/dec/31/what-will-happen-in-2016-p…
Funny thing but I dont see too many predictions of "all will be well as we grow out of this mess", in fact none so far.
I do now think Trump will get the GOP nomination however.
First of all a prediction is a prediction it's a just like bullseye the one who gets it closest wins the most and the odds are high or low depending on you ability to predict, After reading stuff on this site for years i decided to add my two cents worth too.
My predictions for 2016 are low or lower oil prices will be around for most of the year which will keep inflation low and ACC levies are supposed to drop further and the dollar will remain high as the reserve bank made a huge mistake in December stating interest rates wont be going up for a while, Why do they make such statements when they got no idea themselves as it's only back fired now keeping the dollar high which is going to hurt exporters and the drought is only going to get worse as i have never seen such high temperatures at this time of the year for a long time and i don't see dairy prices going sky high again for a while, the fed wont be increasing their rates all year as predicted and inflation will be low due to low oil prices like last year so i predict just like ASB and BNZ that the RBNZ will be cutting interest rates a couple of times this year if not at least once as the Auckland market is responding to all the regulations which is even hard to keep up with for seasoned property investors.
Record low interest rates will fuel the property markets pretty much all over New Zealand, Auckland will be up and down like a yoyo due to severe restrictions by the government and RBNZ to get property investors to invest elsewhere. Markets like Wellington will go crazy due to the change in immigration rules more points for people residing out of Auckland and Wellington is the only second biggest city as there is no third yet due to Christchurch still under going a rebuild which is years away!
Stock market will go to highs again due to low interest rate environment where else would you put your money? it's either stocks or property you would be a fool to keep money in the bank especially with the open bank resolution i don't believe when some people tell me the money is bank is the safest if things go bad with the world economy everyone will be affected now including money in the bank as we saw n greece last year, Hence to diversify i would go for managed funds as i see my growth kiwi saver is doing very well so let the people who pretty much know what they are doing to let them manage the funds i prefer active managed funds like for e.g. Milford asset management.
This is my prediction it may sound like its been written to suit me but is that not everyone pretty much does? Lets be honest with ourselves and see who gets it right but i do have to mention last but not the least its been proved time and again even the RBNZ cant get it right as they all mislead us last year in saying rates will go up to 7-8% and it did go up but not to that extent, they should not have put it up at all or not so much as they had to wind all of it back this year, it made a lot of people to fix loans for two years nearly or over at 6% so if anyone following the RBNZ advice i would just suggest them to look back to see how much harm RBNZ has caused in giving out predictions which are totally opposite so in my opinion you are better off gambling on the lotto website than believing in what RBNZ has to say about our future.
Managed funds more secure than term deposits!!!!!! I don't think so.
Do you really think that actively managed funds will act in time to bail out quickly enough? And when they bail, what do they bail into? Term deposits?
It will be interesting to see what the respective sizes and timings of the falls will be.
However there are also passive funds, which I suspect will take an even bigger hammering?
I have a managed fund, I lost 22%+ in 2008. The projected payout was $100,000+, now its $65~85k but that is only because of the present dead cat bounce, I expect it to pay zero at 65 frankly.
"what do they bail into?" no where, the only possibility is short term Government debt, (6 to 12months) maybe?
Kiwilover you are correct. RBNZ short term predictions are totally unreliable...prediction for NZ$ is about a 30% drop over the next year yet here we have it strengthening in the face of an interest cut!
The lower interest rate was supposed to weaken our $ by reducing the " carry trade " buisness which has been huge....the NZ$ is around the fifth most traded world currency largely because of "carry trading",
(The buying of NZ$ in a country with lower interest rates to place them in NZ and earn higher interest rates...risk for the investor is of course currency may weaken ). Huge advantage for us in that our institutions can then invest that money in treasuries or wherever and provide us with funding for government.....I suspect our taxes aren't likely to be sufficient to pay for all infrastructure development and generous social plans we have in place
Well I don't know about the timing but I know our student debt problem is going to be in crisis soon.
http://www.studentloan.org.nz/blog
Then take a look at the Vice Chancellors pay.
Auckland University’s Vice-Chancellor will receive a salary increase in the next financial year to the tune of $649,000, bringing his total remuneration to approximately $1.3 million per annum. The Vice-Chancellor’s office confirmed the increase this morning and said in a statement that the salary hike will be funded by “skimming” the paychecks of “non-essential” personnel such as university cleaners, security guards, caterers and lecturers.
http://craccum.ausa.auckland.ac.nz/news/news-vice-chancellor-doubles-sa…
http://www.theaustralian.com.au/higher-education/vice-chancellors-salar…
Hubris Syndrome
For some politicians and business leaders, power can become an intoxicating drug, and can affect their actions and decision-making in a most serious way. The ancient Greeks called it hubris, and identified arrogance and contempt for others’ opinions as classic traits
http://www.amazon.com/The-Hubris-Syndrome-Blair-Intoxication/dp/0413777…
ABSTRACT – Hubris syndrome is associated with power, more likely to manifest itself the longer the
person exercises power and the greater the power they exercise. A syndrome not to be applied to anyone with existing mental illness or brain damage. Usually symptoms abate when the person no longer exercises power.
Four heads of government in the last 100 years are singled out as having developed hubris syndrome: David Lloyd George, Margaret Thatcher, George W Bush and Tony Blair.
http://www.clinmed.rcpjournal.org/content/8/4/428.full.pdf
Only 4: Can you think of one other?
OK here are my suggestions, going forwards. (Not much different to last year).
Free money will be given to those who have lots. Ammunition is needed to improve our lot.
Small lots will be given to those who don't have lots.
Middle income earners will continue to become equally divided into smaller lots and housed in smaller plots as downsizing becomes the New Housing craze, World Wide Some will make a bomb, some will not.
Large Supermarkets will get larger to cater for the Big Cheeses.
Small caterers will downsize to cater for the lesser demands of the Small Fry.
Large Milk Producers will provide larger cheeses for the Big Cheeses, whilst slowly selling off some of the Land Banking to those same Big Cheeses. More on this later.
Big Oil will become useful to oil the wheels of down trend from 4 wheels to two as people back peddle, coasting on their new Electric Bikes to avoid major new taxes on 4x4s imported from China. ISIS will continue to use any, all donations gratefully accepted.
Russian and Friendly Nations Oligarchs be exempt from entering into taxable status as Putin has put in a good word for his cohorts and will kill anyone who disagrees.
ISIS will be given a free reign by America as part of their New World Agenda.
The new State of the Nations Republican/Democratic States,, consequently will increase 5 fold to 260. Trump that.
I will personally be offering to rebuild Syria and all and sundry Middle Income Eastern Nations containing each and every Bombed Out Palaces and small houses as part of my new Housing Business Strategy. ISIS will be my partner in Crime. We will make a killing.
Land Agents will make a Bomb.
One minor, itsy-bitsy change..
Everyone will be in my Debt. Fed, but not too much as Fonterror will cooperate as I shall make em an offer they cannot refuse. Putin is my BFF. China, not so much.
Alter Ego will become the new Big Cheese in New Zealand, based on these 2016 Philosophies and alliances.
You have been warned. Cooperate or do or die.. laughing... in the attempt..
HUBRIS...in deed.
Not many landlords on here are predicting increase in rents are they?
I personally don't understand why most landlords tend to take a conservative approach by not putting rents up by much as rates are going up especially in markets where property prices have increased and insurance is going up and if you own and apartment body corporate fees is going up due to monies being put aside for long term maintenance plans. I find that most landlords are scared to increase the rents or tell the existing tenants to either sign up at a higher price for another years fix term contract or they can leave as most tenants who want to stay on want to just stay for six months on the same rent and when they leave in winter its almost impossible to find a tenant even in Auckland CBD or wellington as i have experienced even autumn or spring is no better it takes on average a month to find a tenant.
Not many landlords on here are predicting increase in rents are they?
I personally don't understand why most landlords tend to take a conservative approach by not putting rents up by much as rates are going up especially in markets where property prices have increased and
insurance is going up and if you own and apartment body corporate fees is going up due to monies being put aside for long term maintenance plans. I find that most landlords are scared to increase the rents or tell the existing tenants to either sign up at a higher price for another years fix term contract or they can leave as most tenants who want to stay on want to just stay for six months on the same rent and when they leave in winter its almost impossible to find a tenant even in Auckland CBD or wellington as i have experienced even autumn or spring is no better it takes on average a month to find a tenant.
I hope landlords don't get bullied by tenants as i have been coming across a lot of tenants who are starting to emotionally blackmail landlords not to increase the rents or not to ask them to sign up for another year till next summer so all the talk of tenants needing longer contracts are not right most tenants are not happy when rents go up or when the landlord tells them they have to go as they are not prepared to pay a bit more and sign up for another year.
There are lots of bad tenants too not just bad landlords and most tenants got no idea about the tenancy rules regarding giving notice to end and rights of landlords.
I predict rents will be going up especially in Auckland, Wellington, Tauranga, Hamilton in that order.
its supply and demand, if you have a good tenant why would you slam them every six months, they eventually leave and the tenant that replaces them might not be so good and you might end up with a higher maintenance bill.
not all wages are rising by inflation and while rents must rise to keep up inflation, the balance is how much can my good tenant afford before they start thinking about their options
I even know of landlords rewarding good tenants with a weeks free rent for Xmas
Predictions for 2016? .....Portugal a mess, Greece hasn't gone away, Italy is not that far behind Spain with Rajoy possibly forming a lame duck government with a move to the left, Merkel already scheduled to be replaced, UK possibly faces Brexit, France still so unionised and lefty that it still cannot reform and sinking under weight of its civil service, USA elects Trump as Republican leader, Chinese property bubble bursts resulting in Australia having no pickup in iron ore exports, New Zealand having no pick up in export of WMP, New Zealand kills foreign investment by stopping immigration ( we want your money but we don't want you seems to be the attitude of many), Iran starts pumping oil driving price lower still with possible global deflation ..........what could possibly go wrong with our investments?
Otagoboy predicts
NZ kills foreign investment by stopping immigration (we want your money but we don't want you seems to be the attitude of many)
The Investment conduit
Is there a direct correlation between immigration into NZ and the flow of Investment Funds?
The following tables from NZTE indicates not
https://www.nzte.govt.nz/en/invest/statistics/
Check out tables 2,3,4
2. Foreign direct investment flows into NZ by country for 2014
3. Stock of foreign direct investment in NZ by country for 2014
4. Stock of total foreign investment in NZ by country as at December 2014
The country of origin of the largest source of Migrants into NZ doesn't rate a mention
The largest source of foreign investment is AU while being a limited source of migrants
If you ignore investment from Hong Kong, Mainland China hardly registers
The implications being
(a) NZ needs investment from country "A" to fund and support migrants from country "B"
(b) There is no correlation - restricting immigration should have limited impact
@ two otherguys.
Thanks for that, an interesting link but I think you must have missed some of the detail when you say " Mainland China hardly registers" in fact direct investment was 3.4 billion in March falling to 0.6 billion in December as the economic climate in China changed. A total of 4 billion direct investment but there are no figures provided for the "carry trades" which are what keep the NZ$ strong and the NZ$ as one of the worlds most traded currencies all of which funds investment in NZ through Treasury Bonds etc.. which in turn funds government, ( in addition to our taxes of course).
Carry trade investment into NZ is huge.
The way things are going, I wouldn't be surprised if things blow up in the South China Sea this year.
It has been quite alarming how quickly tension has built through 2015, with China accelerating its land reclamation and military presence, countries with rival claims such as Philippines and Vietnam becoming increasingly incensed, and US and Australia doing 'freedom of navigation' flights over the islands.
It would not take much to spark a military confrontation between China and one of the SE Asia countries - especially if the region falls into recession and a distraction is needed. If it draws US and Australia in against the Chinese position, then NZ (amid a lot of hand-wringing) will have to fall in line.
What price our dairy exports?
New chinese route causing another tsunami; all markets down substantially. New 5% and 7% circuit breaker rules applied to chinese markets after 2 routes; 7% breaker causes market to cease trading 2 hours early and close for the day. Huge volatility ahead. Rippling through Europe last night. Intersting times ahead.
1. Slower global trade growth in 2016.
2. Oil price to pick up in the second half of the year.
3. US Dollars difficult to get hold of as every country will be buying more and the US dollar will strengthen.
4. NZ Government to bring councils spending under control to help rate payers. The top 25% of Council workers to get a 20% pay cut from Nov 2016. Out of control council spending to be tightened up to help rate payers.
5. Dog walkers where signs are up saying " All Dogs on Lead" Any dog found not on lead will have to pay $2000 fine. Anyone bitten an additional $3000. Ban on bitbull and crossbreeds brought in. No longer be allowed for breeding.
6. House prices to be stable in first half 2016 with limited gains.
7. North Island NZ to have stormy weather in March 2016.
8. Another dull year for milk prices but Tourism will have a great year!
Tourism in NZ goes up a further 40% by year end - foreigners looking for a safer haven
War in the middle east escalates, Iran and Russia attack Israel
The economy in USA, Japan, China, and Germany crash
Gold and silver continue to rise
Mass civil unrest in Europe
Rise of right wing extremism in the Northern hemisphere
Thousands of Jewish people immigrate to Israel especially from France, Germany, and the USA
Oil will go down to $20 a barrel and then shoot through the roof
Better late than never.
- NZ house prices and coastal/lifestyle block sales increase rapidly (combination of immigration, tourism, safe haven investment, loosened credit, continued TLA zoneration stupidity and FOMO)
- Gubmint stands by and wrings hands, frowns publicly, counts tax take, smiles privately
- Thirty-year war in ME rattles along (see Spengler at http://atimes.com/2016/01/saudi-arabia-in-policy-hell/ )
- Europe ditches Schengen (de facto if not de jure): the first purpose of Gubmint is, after all, to protect its citoyen.
- Another celebrity or three pops their clogs
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.