Finance Minister Nicola Willis says US President Donald Trump derailed the economic recovery she had been incubating as Minister for Economic Growth with his tariffs.
In a press conference, the minister fended off accusations that she was responsible for a 0.9% slump in activity during April, May, and June this year and instead pointed the finger at President Trump.
A reporter asked Willis whether the Prime Minister still had confidence in her considering there had not been any economic growth since she was given the job at the start of 2025.
“There was in the first three months of my tenure. At 0.8%, it was much faster growth than there was in Australia. It is true, Trump disrupted my momentum,” she said.
Trump announced massive tariffs on virtually every country in the world on the second day of the June quarter. This spooked global markets and triggered a trade war with China.
Willis said this had “knocked the stuffing” out of the New Zealand economy with firms and households having an “outsized” reaction relative to other countries.
Most other economies continued to grow in the June quarter but some with large exposure to the United States, such as Germany and Canada, experienced small contractions.
Labour Party finance spokesperson Barbara Edmonds said Prime Minister Luxon—not Donald Trump—was to blame for the lacklustre economic recovery.
“Christopher Luxon stood in front of New Zealanders in 2023 and said his business experience would fix cost of living and the economy. Instead, he has failed dramatically,” she said.
She said this was highlighted by the fact Australia’s economy grew 0.6% in the same quarter while facing similar challenges from the Trump tariffs.
“They will blame everyone else for their failure and say they just need more time. But the truth is clear: under Christopher Luxon, New Zealand is heading in the wrong direction.”
Stick to the plan
Broadly speaking, the Coalition’s economic strategy is to reduce government spending as a percentage of GDP to encourage interest rate cuts, while also relaxing regulations and planning restrictions to boost private sector investment.
Critics argued tightening fiscal policy while the economy was still in recession could be damaging and that stimulus should continue until the recovery had been cemented.
Willis said she didn’t think there was a need to change strategy, as the June downturn was a temporary reaction to uncertainty which wouldn’t be repeated in the third or fourth quarters.
“I still think that our fiscal path is the right one. This is not a time for drastic action, but we do need to consolidate our finances. We have forecast a track that gets us back to surplus in the 2028/29 year.”
The Government was already "consciously choosing” to spend more on infrastructure and services than it was earning in tax revenue as a form of fiscal stimulus, she said.
“We are already stimulating the economy, by definition, because we are borrowing billions in order to keep investing in the infrastructure we think is essential for growth [and] to continue investing in a range of government services.”
The Finance Minister hinted the Reserve Bank should continue to cut interest rates, saying the June slowdown affirmed their lower August interest rate track.
“It is the case that the Reserve Bank has the largest levers here for ensuring economic recovery, in terms of providing confidence that interest rates will remain low and borrowing will be more affordable,” she said.
19 Comments
Voters should blame Donald Trump for New Zealand’s slow economic recovery
Would be nice to have leaders who can take personal responsibility and accountability instead of blaming everything on Trump, Russia, the sheeple for not spending like drunken sailors. This was also a problem with Jacinda and Robbo - always someone else's fault and unforeseen circumstances.
"Please miss, it isn't my fault, the dog ate my homework!"
This is more, the dog has taken a dump on the carpet in the TV room situation......
"Willis said she didn’t think there was a need to change strategy, as the June downturn was a temporary reaction to uncertainty which wouldn’t be repeated in the third or fourth quarters"
They keep saying growth is on the way and it never seems to come. If the downturn is repeated in the third or fourth quarters, they will change strategy? It still seems pretty gloomy here in Auckland...
She can keep blaming others until the election is due
But it will destroy Nationals chances. The strange thing is a new face saying the same thing will not help, we actually need fiscal spend and not increase depreciation etc etc. Any direct stimulus will need 3-6 months to line up, ChatGPT
Direct Fiscal Stimulus Examples
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Stimulus Payments:
Governments can distribute direct cash payments (often called "stimulus checks") to citizens to quickly inject money into the economy, particularly during crises.
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Tax Cuts:
Lowering individual income taxes increases disposable income, enabling people to spend more. Business tax cuts, such as investment tax credits, can encourage companies to hire more workers and invest in new equipment.
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Government Spending:
- Infrastructure Projects: Funding large-scale projects like roads, bridges, and public transportation creates jobs and modernizes national assets, injecting money into the economy.
- Public Services: Increased funding for education, healthcare, and other public services can support employment and meet immediate social needs.
- Direct Transfers: Providing unemployment benefits and emergency support payments to those who have lost jobs or are facing income insecurity is another direct way to provide aid.
Meanwhile ministers saying we do not need more nurses, we do not need more teachers.
As a betting man they will do nothing but hope that the OCR cuts will help change the mood and by end of Q1 things do not look better. IMHO its a losing bet.
They will try to recover with last minute fiscal support and goto the population with a remit to make major changes to NZs reliance on housing, because it will be clear to everyone that the property drag on the economy needs direct and hard fixes. China is an example here the property drag is considerable
Is it Trumps fault your super market announcement fell flat?
Willis needs to go, at least Willis, but if Lux is to weak to demote her then he has to go as well........
This is clumsy not savvy politicking and I think regrettably, this is another case of ego outstripping ability. When one doesn’t recognise the limitations one has, then a downfall becomes inevitable just as a vehicle with faulty brakes or driver or both, will eventually crash.
This government is all about claiming responsibility for things that aren't really them, then claiming they aren't responsible for things that are definitely them. They are so full of double-speak, its hilarious.
They still claim that its because of them that interest rates have come down, despite this being controlled by the RBNZ and them really having not much to do with it (it was already heading down sharply under Labour, we were following almost identical track to every other country). Then they will also say that anything the RBNZ does is not their responsibility because they are independent. You can't have it both ways guys...
The economy is in the toilet and debt to GDP is likely not getting better... thanks to your policies Willis. Just own up to it, realise you didn't really have a clue about running an economy, please. Its obvious to anyone that looks, you even make it perfectly obvious yourself by claiming the countries economy is just like a households.
If a finance ministers actions are not able to drive the economy as claimed, as external factors do it instead, then it should follow that there is no need for the job to exist any longer...
Nicola has 4 children and sees the country as a bigger version of her own family budget.
So when there's no money coming in the door, stop spending!! Sorry kids we haven't got money for new shoes, cut up this old tyre for sandles. For warmth, huddle up with the cat
So an admission by a NZ politician that they don't have that much control over the local economy which is at the mercy of international events.
So she won't be taking the credit when things pick up then and say "oh it was nothing to do with me, it was just the global economy worked in our favour at this point"?
Yeah right
Trump only arrived at the end of January and the tariffs actual imposition only two months or so ago. To claim that the affect of the tariffs has impacted so significantly and so immediately to arrive at this result for the end of June quarter, in such a small timeframe, is simply not credible and raises the concern that straw clutching is all that is now on the table.
they wasted the proceeding months debating supermarkets and the treaty... we need drastic measures now.
"Willis said this had “knocked the stuffing” out of the New Zealand economy with firms and households having an “outsized” reaction relative to other countries"
It's good to see the polls really reflecting the quality of straw-clutching we are seeing here.
Can anyone hazard a guess why NZ would react more than other countries (that were mostly more impacted) ?
Willis said this had “knocked the stuffing” out of the New Zealand economy with firms and households having an “outsized” reaction relative to other countries.
Any evidence to support this?
One of the observations that former Finance Minister Bill English made was that "government is not like a business."
I think the coalition did not take that on board and have rushed through some big fiscal changes very quickly and under-estimated the macro-economic shock this has delivered.
Don't worry, a few more concerts at Eden Park will get us all feeling better...
Not likely, Agony Aunt Helen though!
Funny how we all look to the government to save our arses. And the government thinks they’re up to it.
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