Research firm Infometrics says New Zealand could avoid a recession this year, but for most people it will feel like the economy is contracting.
The impending tourism revival was likely the only thing that kept economic growth in positive territory as Kiwi consumers went into their shells, it predicted.
Chief economist Brad Olsen said households are coming under “enormous pressure” from rising interest rates, a housing correction and inflationary pressures.
“We estimate that the average mortgage rate currently paid by households has risen from 3% to 4.2% since August last year, but will rise to 5.7% by the second half of 2024 as homeowners face significantly higher rates. rates,” he says. said.
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Infometrics predicts the economy will grow 2.8% this year as tourism fuels a “temporary and uneven rebound” in economic activity over the coming summer months.
By the end of 2024, Infometrics expects economic growth to have slowed to 1.6%.
Data from the online job site Seek suggests that worries about an economic downturn could finally have a dampening effect on the job market.
Nicole Gourley / Stuff
Job ads fell in June, Seek said, but remained well at pre-pandemic levels.
It reported that from May to June, the number of job openings it posted fell by 3% and the number of applications per vacancy increased by 5%.
Country manager Rob Clark said the drop in job openings was the biggest drop in 10 months, but noted that the number of ads was 35% higher than before the pandemic.
Seek and Trade Me are the two largest job boards in New Zealand, with Seek traditionally stronger in the white collar market and Trade Me in blue.
Data released by Stats NZ on Thursday suggested consumer spending may be above its sustainable limit, ahead of another expected rise in inflation, which could also spell poorer times for the economy.
Statistics New Zealand reported that Kiwis essentially stopped saving in the March quarterwhen household disposable income grew 1.8% to $53.8 billion, but net savings fell to just $19 million, or less than 0.04% of that total.
Families were worse off in the quarter, the report said, with household net worth falling $42 billion, or 1.7%, due to declines in home prices and financial assets such as stock prices.
MONIQUE FORD/Things
Infometrics economist Brad Olsen says the economy is “trying to do too much with too little.”
ANZ predicted that Stats NZ would report Monday that annual inflation in the three months to the end of June had risen to a 32-year high of 7.1%, suggesting no early end to the cost of living.
BNZ and Westpac are in the same range and forecast annual inflation to be slightly higher than in the March quarter at 7%.
Olsen said a broad supply-demand imbalance was needed to shrink before inflation was brought back under control.
“The economy is trying to do too much with too little, and demand has to decrease, closer to what the economy can supply, if we want to limit price increases to more manageable levels.”