New Zealand’s economy got 0.1% smaller in the last three months of 2023, bringing annual growth for the calendar year to just 0.6%.
Stats NZ reported gross domestic product had fallen for a second quarter, after the 0.3% decline in the September quarter.
This result was a small surprise for forecasters who expected 0.1% growth and the Reserve Bank which predicted no change during the quarter.
The largest downward drivers came from a 1.8% decline in the wholesale trade of items such as groceries, liquor, machinery, and equipment, Stats NZ said.
Retail trade in things such as furniture, electrical goods, hardware, and food and beverage services were also weak with a 0.9% fall.
Industry level results were mixed with half increasing during the quarter. Rental, hiring, and real estate services rose 1%, and with public administration, safety, and defence were up 2.8%.
Ruvani Ratnayake, a senior manager at Stats NZ, said the general election boosted activity in the public administration sector. This likely includes temporary workers hired to collect and count votes.
The expenditure measure of GDP was flat in the December quarter, with rising net exports being offset by businesses running down their inventory levels without restocking.
Data showed inventory levels dropped $1.3 billion in the quarter, after having risen $681 million in the September quarter.
Household spending grew 0.5% with more money being spent on transport services and less on alcoholic beverages and petrol.
This data release was the first which officially included a new income-based measure of GDP, as opposed to the existing production and expenditure measures.
Stats NZ said the income measure captures wages, profits, taxes, and subsidies in non-inflation adjusted prices. It will provide a “wider view” of the economy but not replace headline GDP.
This income measure fell 0.6% in the December quarter on a nominal, seasonally adjusted basis, while inflation-adjusted expenditure on GDP was flat.
Recession per person
What this data shows is that GDP per capita dropped 0.7% as the population grew by 0.6%.
New Zealander’s purchasing power fell 1.4% at a headline level and 2% on a per person basis, as measured by real gross national disposable income (RGNDI).
RGNDI is essentially a resident’s ability to buy goods and services from the countries income and it has declined 2.8% across the 2023 calendar year on a per capita basis.
This is in part because export prices have fallen 4.2% while import prices have risen 3.8%, hurting the terms of trade and meaning residents can buy less from any given level of economic activity.
Nominal GDP, which best matches the Government’s tax take, was up 0.6% during the quarter and 4% in the calendar year, bringing the total size of the economy to $405 billion.
There were only minor historical revisions to previous data over the past four quarters.
265 Comments
HGWR
Wrong wrong wrong - business issues are more about rising costs of Rent/Rates/Insurance/Power and reduced spending due to this and Govt regulation increasing other costs so lower profit and increased costs push a business to the edge and higher interest rates push it over. I hope should your roof blow off and you discover the only roofers have either gone out of business or are unavailable for 3 weeks and its July with snow on the ground that you are still pleased these unproductive business;s are gone..
Depends on the business life cycle, you know that and are being disingenuous or you have no clue. So I suggest this is why people should not try true enterprise in NZ as this appears to be the prevailing attitude and why the smart ones set up overseas at the country loss because a socialist mentality doesn’t produce anything🙄
Socialist mentality does produce a lot of C02 though, a lot of talking, waffling, complaining, promises, endless meetings. You are right nothing actually gets produced except large amounts of CO2. Therefore socialist mentality should surely soon be banned to save the planet.
It's not the socialists collecting their universal pension benefit, it's the over-allocation of funds into speculation on existing housing (and rewarding of this via policy) rather than into building productive businesses. Successive governments have incentivised so many Kiwis into lazy land speculation instead of rewarding them for building a business.
I agree. Our economy is not in a bad state now. The interest rates arn't that high. If you're not making money now there is something wrong with the industry or your people. (I will add that not all industries make money but are necessary for the economy and resiliency of our country - such as manufacturing)
It's not the high interest rates, it's the reduced spending which is causing problems for businesses. However, the reduced spending is directly related to the high interest rates, partly due to increased credit costs and partly due to consumers putting their money in TDs rather than spending it.
Suspect that the majority of likes attributed to this comment are from 'wage slaves' who never had the courage or creativity to start a business. Entrepreneurs are the lifeblood of any economy. We should take no joy in seeing talented hardworking losing their life's work due to an overzealous Reserve Bank that has made an absolute balls up of tackling inflation.
The reserve back was incompetent and overzealous when they crashed interest rates through the floor. That should never have happened. Many people saw it for what is was, made a lot of money by taking advantage, and called it right when the reversal came. All they are doing now is bringing rates back to where they should rightly be. Mortgage rates between 7-9 are normal. They will stay where they are, around that range. We won’t be seeing the low rates again. If businesses cannot survive in periods of normal interest rates, then they can’t exist. It is that simple.
"Many matured economies are stagnant with little places to grow"
Please enlighten us as to which economies oh great Oracle ...
Please also enlighten us as to what "tits up" means too. ...
A definition with numerical quantification would be much appreciated for us mere mortals (but we're not expecting anything sane ...)
That's already factored as the unemployment rate denominator is the size of the labour force, not the population as a whole. Our labour force participation rate is also one of the highest in the world so it's not low participation that flatters the unemployment stats.
We are an unproductive, low wage economy where the labour force is bigger than usual as people scrape to get by.
Very low levels of building across the country I suspect will be keeping gdp lower.
"Fewer building consents are being granted as people struggle to afford home loans amid interest rate rises and the cost-of-living crisis. The issue has prompted concerns New Zealand’s “most unaffordable city” will become even more expensive to live in. Kiri Gillespie reports. A sharp fall in building consents in Tauranga has sparked fears of spiralling house prices and a worsening housing shortage in a city labelled the country’s “most unaffordable”. Industry leaders say nationwide slow-down in consents for new homes"
https://www.nzherald.co.nz/bay-of-plenty-times/news/cost-of-living-cris…
Flying high,
What wonderful news. I live at the Mount, so I can expect my severely unaffordable home to become absolutely unaffordable. If it's good for me, who cares about anyone else. But wait, what about my grandchildren? While my generation quietly cheer on ever higher property prices, the result will be to drive ever of our families overseas and we will bemoan their inability to get on the property ladder. This is called cognitive dissonance.
However, as the economic clouds get increasingly darker, I can't see prices rising significantly and my faith in this government's ability to 'grow the economy' is precisely NIL. One small example; this is the party of law and order, yet while saying that more police will be recruited, the budget will be cut by some 7%, resulting in fewer back-office staff to do the inevitable paperwork. If more police time has to be spent on form-filling, what sense does that make? of course there is fat to be cut from some areas of the public service such human resources, PR people and others.
No, if anything we need another 25bp hike, this is the rebalancing we had to have.
The 2 year swap is 25bp below it's long-term average. Interest rates aren't the problem, our lack of productivity and gorging on artificially low rates to pump up house and use that to buy Stabi's and Rangers instead of investing in capital goods is the problem. Climate inflation is also going to lower our standard of living, this is a glimpse as to what that will look like.
We should be taking GST off food and putting a capital gains and land tax in place to redistribute wealth. House prices need to fall.
I'm centre and vote what's in front of me at election time. Any person who is tribal with their voting is a fool.
Bear in mind that NZ has had the most free market and generous residential investment property market in the world - those untaxed gains need to at least feed those on the lowest incomes. Tax cuts for landlords while poor struggle to put food on the table is f+++++ immoral, even though I am a beneficiary.
Centre right economics but centre left social equity. Anyone who thinks it's ok charging GST on food staples while having no capital gains tax on investment property needs to look in the mirror.
The only group I see trying to do something about this are Te Pati Maori.
How Luxon and co. are able to reconcile supporting lanlords and tobacco over those struggling to feed their kids is beyond me, I'd feel better about myself stumbling out of a Nevada whorehouse at 6am.
Rest assured Te Kooti that taking gst off food will not lower the price. Any perceived saving will be gobbled up in compliance cost - both via each business and secondly via increased IR staff to police it. I
It will also benefit the wealthy more (15% removed form the $10k dinner party is much more than 15% off the $100 grocery shop).
If you wish to help low earners fair enough, however this gst idea is a useless way to do so.
The problem we have, is, that most don't understand removing/lower a tax is a crock. They parrot on that it will lower the cost of something, with the expectation that the lower cost will be permanent. - Spoiler alert - it's not.
We know this because we already pay x for product y. So yes, you will see y's price drop by 15% on the day. But it will then sneak back up to x within a month or two - because that is what the market will pay.
Lowering/removing GST (or any form of VAT) from anything is therefore unfeasible, as all it does is transfer wealth from the govt to the business - and it is usually the big corps that benefit the most. Lil' ol' ma and pa (the same ones that don't get it) probably drop the tax and are none the wiser.
There were warnings about GST aplenty at the time of its introduction. Jim Anderton for instance, that it was a blanket application of tax that disfavoured those least able to pay tax in the first place, ie low income earners. It is now too well established to allow any selective reductions. For instance supermarkets able to now sell a product at a price know that is viable on the market and would soon have it back there. Likewise taking GST off local rates the councils could not resist loading them straight back up again. Reality of how it works really.
No problem with CGT on realised gains, except on the house you live in. Land tax maybe but not until the mess that QV is on land valuation. At the same time or before the method of land valuation that QV have to adhere to is in one of the Acts and that needs changing as well.
I see Chris Hipkins, captain of the ship claims he wasn’t even in charge. Must be because he jumped off at the last minute and so it’s not his fault. How he can say that with a straight face is unbelievable. He and his moron team crashed the good ship NZ into the rocks. There is no escaping it.
Anybody who blames this solely on one side of the political spectrum is being willfully ignorant. This is the culmination of decades worth of poor choices from successive governments that eventually led us to this point. Look around the world, give me an example of a country with similar economic and social structures to New Zealand that feels materially better off than it was 6 years ago, our problems aren't as unique as we like to think they are.
This is the culmination of decades worth of poor choices from successive governments that eventually led us to this point.
Poor choices?
NZ's boomer generation is 6th happiest in the world. They've made some great choices.. at least for their own generation. Diddums to the 'idiots' who waited till after 1990 to be born..
Countries with very different rankings at different ages reflect something unusual, relative to the world average experience for each age group. For example, the four countries in the NANZ group - the United States, Canada, Australia and New Zealand - all have rankings for the young that are much worse than for the old
*UK is similar.
I wonder what these countries have in common?
Oh. I see so using your logic chippie the dork as he now seems to be known was quite within his rights to blame the new government that barely had two weeks in office for this disaster, because of course that must be true. Now I understand. This situation has been obviously coming for a number of years as Labour possessed everything up against the wall. I’m actually surprised it’s taken so long. I’m now wondering when some economist is going to point to higher house prices coming soon as well…..because obviously that’s going to happen as well.
I am more referring to this part of your comment.
He and his moron team crashed the good ship NZ into the rocks. There is no escaping it.
Blaming it solely on them is simple and easy, but it's hardly accurate. We are a tiny economy globally and extremely exposed globally, we have surprisingly little control over our own destiny. Even if we did everything the exact opposite of what labour did I honestly think we would still be in the same situation as we are in now, maybe 10% better off or 10% worse off but given how similar the parties are in a lot of way the end result would be pretty similar. If National was in power would the reserve bank of acted much differently? The reserve banks around the world seemed to act pretty similarly.
J. Hipkins has not got long to go and he knows it. At least that’s one thing he does know. Good riddance. In the front line for all the policy that he disclaimed and bonfired out of expediency. Not one portfolio to be proud of. Least should he get out of politics as his one and only career to date he might well learn that glibness and smart alecing don’t take you far in the real world
Every business or public agency linked to social services and infrastructure was already facing moderate to major funding and skill shortfalls with no end in sight. This year-plus frenzy of low-skilled migration has simply worsened the situation.
Cramming more people into the country is a sure-shot way to turn our ongoing infrastructure crisis into a full-blown catastrophe. We're locked into 5-10 years of double-digit rate growth in basic costs.
Either we pay up big and see an even bigger reduction in our disposable spending or see further reductions in our quality of life. In other words, we're at the end of the road with nowhere to kick the can.
Yip, that’s what happens when you have governments complacent with high house prices. Everyone gets mortgaged to the eye balls, nothing left in their pockets for discretionary spending in other parts of the economy.
But hey, the banks love it - massive profits.
As for immigration to the rescue - 80% are foreign students, not much in their pockets to spend.
Eh, those seem to be a smaller but conspicuously visible subset, in my experience. Very many out there who are struggling through hoping to get work and residency on the other end, including many who borrowed money.
Less since the reduction of the PTE (Pretend Tertiary Education) sector fraudulent colleges, obviously.
Vibe-o-nomics is always better when it comes to economics or politics than boring statistical analysis or proper research (in fact somewhere last year pre-election I recall commenting that Vibe-o-nomics made it clear the government would change, around the time that National was crapping the bed in polls and the race tightened up).
All I need to know is that my wife and her friends - for whom the subject of discussion is usually Taylor Swift's latest boyfriend or some smutty probably-written-by-AI novel they're all reading - are talking about how tough times feel, how holiday plans are being cut back on, how house upgrades are being put on hold. How do I know? Because I go to the dinner parties, and listen to the conversations ... and the spreads at the dinner parties are becoming more modest too. And none of the guys are talking about upgrading the car this year.
I say that in only a slightly facetious manner as well.
In other words, you don't need the weather man to tell you when it's pissing down.
We are missing the high unemployment. For now. But once we reach the tipping point it will accelerate quickly past 5%. Also we need to factor in the number of households that rely on at least 2 incomes to make ends meet. Week to week. One person loses their job and one household is instantly bust with little access to any increase in government income support due to other person still working. So 5% unemployment is really 10%
That will come soon. Retail and hospitality are in big trouble. The minimum wage rises and other inflationary pressures have killed them. People can’t afford to visit these places in large enough numbers to sustain many of these businesses any more, and many people just don’t see the value in a 15 dollar beer and at 40 dollar main that only contains 3-4 dollars of raw materials. Many of these places will fall over in the next few months. Winter will be a disaster.
"Read a report somewhere today that the fed raising rates is having little effect on their inflation. "
Odd. US inflation is continuing to come down. Got a link?
"Inflation historically tends to be a tricky little bugger."
100% correct. Inflation can come from many sources and often multiple sources at once.
"I reckon rates will need to rise if they actually want to smash it"
You may be 'reckoning' wrong.
Not all sources of inflation quickly respond to interest rate rises - albeit all instances respond to a massive contraction in economic activity. In some instances raising interest rates is absolutely the wrong thing to do.
Maybe we cut to the core issue and that is housing/shelter needs to cost less. Otherwise keep increasing minimum wage to give landlords more headroom to raise rents and the result is real businesses have a growing labour bill coupled with a shrinking revenue pie.
From 2013 to 2023:
- Median wages went from $844 to $1273 (50% increase) https://figure.nz/chart/nrYUawzOEbEdxJvE-8OSb3U9YEmWoHkBV
- Median rent from $350 to $600 (71% increase) https://figure.nz/chart/azFwYTVvUcrcxT3m-Cn6TyuSQBZ8Kacee
Read Adam Smith or Henry George: when supply is tight, rents at the low end don't match the percentage growth in income, they match the absolute growth in income (less the growth in cost of other necessities). For higher end rentals it's more complicated because the rent incorporates a premium paid for the advantages of the property - but in NZ not many rentals are striving to offer advantages, because why bother when you can do the bare minimum and milk the supplement instead.
You can't have stagflation when the inflation rate has been falling for many quarters now. And - as yet - unemployment hasn't been rising though that's changing right now but the stats releases haven't caught up yet
If you're going to use big words - best learn what they mean first, ay?
Not hugely out of line with expectations. We're a country in the middle of a disinflation with tight monetary policy. As we all know from history, that's a recipe for a cyclical downturn. Getting domestic inflation down is going to take a lot more of this especially as the main components now driving domestic inflation are going to be very resistant to monetary policy - a range of administered, local and central government charges, insurance premiums and housing rentals.
Its going to get a lot worse in the next 2 quarters, just look around and since this government has ordered austerity, everyone is cutting staff and spending is down the gurgler. Wellington feels like its falling apart, huge drops in spending everywhere.
But you know, the government is like a household, landlords are more important than police and we gotta give some tax cuts even if they are tiny. It really feels like we have replaced economic mismanagement in the beehive under GR with economic cluelessness under NW.
This govt is challenging democracy big time. Refuse regulatory impact statements for their emergency repeals, this is why, it's a much bigger threat to democracy than co-governance hysteria, it's putting the power in the hands of big business...
https://www.rnz.co.nz/news/in-depth/512253/pm-christopher-luxon-s-tobac…
Sorry had to scoff there, after the last govt I can hardly call this one to be seen as 'we know best' by an order of magnitude in comparison. Otherwise you may as well lock yourself down, play repetitive adverts around COVID back to back 24/7 and line up for 45min to get into the supermarket again voluntarily.
So if we assumed those were such examples, two wrongs would make a right?
Interestingly, Nats and Labour were in agreement that lockdowns etc were appropriate for the time, following international examples and advice rather than going against all transparency and advice because "they know best".
Exactly, Covid emergency powers had cross party support and they were always time limited to address the minor issues of a f****ing global pandemic, not to steamroll private business interests over community, nature and our personal freedoms.
You cannot classify these actions as anything over than the biggest roll back of democratic process since Muldoon.
That’s a load of BS. Co-governance, as prescribed by Labour was a racist rort and has been soundly rejected by the NZ public.
the current government is using the same mechanism to rollback this unwanted stupidity as were used to put it in place. The previous government rammed all this stuff through without any mandate whatsoever. The current government is rolling it back as quickly as possible because a) there are more important things to do than discuss cancelling stupidity, and b) these are mandated election promises that they committed to reversing in their first 100 days. So, they promised it, got elected because of it, and they did it. Where is the issue? I also see that 25% of the ministry of health are getting the axe. This is a good start. I’ll bet you any money that those going won’t be actual people that know about health, they will be all the useless hacks promoting cultural issues, gender issues and diversity managers. Good riddance.
This post looks like pointing at other things that don't resemble the same powers that are being sought/granted. And distracting with talk of rolling back etc.
But we are specifically talking about giving ministers additional powers to push through what they want over and above the state.
Really? Above it is talking specifically about emergency repeals, which I assume is supposed to say repeals of legislation under urgency not “an emergency” and it also talks about co governance. It does not actually make a lot of sense, but that is why is seems to say.
Yes it is. If you understood what governance is and what these powers do you would understand but because co-governance had Maori in it you drank the cool aid.
How would you feel if these powers, instead of sitting with your favourite three ministers sat with Nanaia Mahuta, Golriz and Woods. Would you still be claiming this was fine?
Take you political party blinkers off.
Uyghur's are one of about 55 minorities in China, the Zhuang the biggest. Many of them have special status', live in semi autonomous regions and have positive discrimination policies. For instance many of them were exempt from the one child policy, the han majority government actually wanted their populations to increase to increase diversity. Many of the small minorities are actually protected strongly, even strongly islamic ones in the South of China. Hell even the Uyghurs have special status, its just that there is violence involved, much of it the fault of Chinese governments pro development policy, but violently resisted and violently suppressed. Westerners tend to focus on that 1 but forget the other 54 who are promoted and supported by the government.
My wallet has been padlocked shut for a few years. Nuts are in the storeroom..
inflation always takes ages to sort out.. especially coming off the back of such an artificially extended boom.... USA isn't seeing it fall even though some sectors are being hammered .. ditto here
I hear you! The thing is, insurance premiums are not going to be sensitive to the level of interest rates. The RB is going to struggle getting domestic inflation down. The other main source of inflation now is central and local government generated - think rates, car registration fees, RUCs, electricity lower user adjustments etc etc etc. These are not going to reduce because of monetary policy.
You are right.
Still plenty of work ready job seekers finding jobs. On par with this time last year.
Actually seeing a drop in people seeking a benefit from the start of the year.
https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/s…
Just been to my weekly coffee morning with friends. It was very quiet. Then drove home via the Main Street. Car parks everywhere. We are certainly hurting as an economy. These GDP figures do not surprise me. It actually seems quieter than the actual figure given to us.
Its no surprise that GDP data out today confirms New Zealand is in recession. This comes at a time when we have unsustainable levels of migration and sticky inflation. Imagine what the economy would look like with lower population growth. The Government has a lot of work to do.
Biggest takeaway for those who don't read past headline numbers:
What this data shows is that GDP per capita dropped 0.7% as the population grew by 0.6%.
New Zealander’s purchasing power fell 1.4% at a headline level and 2% on a per person basis, as measured by real gross national disposable income (RGNDI).
What stopped it being that this time? I can tell you having done that math:
- the election (public admin contribution)
- owner occupied property services - aka the amount of money that stats nz assume that people are paying to rent their own houses, which is linked to .. market rents!
Who cares if your kids don't have a teacher, or there are no police on the beat, and our infrastructure is crumbling - as long as there's a vape shop on every corner and a liquor store and takeaway on every street (and you can always get somebody to pick you up in a crappy old Prius on Uber when you're pissed at 2am).
Takes a bow!
I should have remembered that when rents increase by more than than CPI this pushes GDP up (through owner-occupied property service cost - basically imputed rent). I knew the election in Q4 would stop things being too catastrophic. I had -0.3% next quarter I think. I might actually downgrade that now that we have seen the latest current account deficit data, The next year looks horrific.
Oh boy..
This is what we're going to see in the upcoming months
https://www.stuff.co.nz/politics/350220974/hundreds-lose-jobs-ministry-…
The savings are being applied to whole agency budgets. Several orgs in scope would have to sack *all* of their staff a few times over to make the savings required of them. This means that it is the external spending that will have to be cut - and that means thousands of non-govt jobs for the chop. Incredible that the media hasn't done the basic maths to work this out yet.
Might be in the upcoming days rather than months.
About 180 roles could be disestablished at the Ministry of Health (MoH) as it looks to downsize staff numbers by 25%.
https://www.thepost.co.nz/politics/350221256/ministry-health-looks-downsize-25
Granted the sheer volume they took on 2019-2021 for the potential cannabis reform legislation (was being worked on in in advance in case of a yes from the referendum) and the end of life act, plus all the covid roles, id say they are still bloated after this culling.
Indeed. Most Kiwis still think we're in the top 20 on a PPP basis.
Can someone remind me what the government's plan is to get us back to where we were when boomers were fist starting work and buying their first house?
FWIW - Wikipedia says 62nd on a PPP basis. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) ...The actual number doesn't really matter much ... Just look at the 5 above and 5 below ... Such good company to be in.
Maybe those farmers can dig us up a prize winning potato or a Kumara or even a Carrot? Or maybe a Nugget, a Chicken Nugget or Gold?
Luxons already out of 💡 ideas I reckon.
Winston to the rescue!
https://youtu.be/4fxA7zLLQzY?si=pkbqwWpf-ymWXAQB
The good news for Kiwi's is that they can still jump on a Jetstar special and head over the ditch, as Australian unemployment has fallen again from 4.1% to 3.7%. This is despite a record level of immigration as Australia absorbed a net 548,800 new workers.
Don't know that unemployed Labour MPs and their public servant ilk count as employable though.
In some regions they're building even less houses than us per additional head of population, and have a building industry that's been bashed worse over the past 12-24 months, in terms of insolvencies and job losses.
They're losing building capacity just as they really needed to be increasing it. We're not too far behind, but a shift to Aussie is going to be a sideways one, on average.
"https://www.theage.com.au/politics/federal/migrant-numbers-growing-as-g…"
"New figures out on Thursday are likely to show a further lift in net overseas migration, putting more pressure on the government to limit population growth."
Get in quick ...
"Here we go again. It’s the most important one-man show on Broadway. It opens, and then reopens 6 or 7 times a year. And the star of the show, the Fed chairman, Jay Powell, plays himself.
The great thing about these Powell performances are they’re like Rorschach tests. You can read anything into them you want.
Wall Street spends untold sums hiring analysts who try to interpret Mr. Powell. Investors are undoubtedly baffled by all of this."
"Higher, for Longer."
https://www.reuters.com/markets/rates-bonds/feds-rate-cut-confidence-li…
The Jackson Hole Hui are all that matter. The G20 turned up and that plan is still in play. Powell loves to tease the market and then holds out on them again and again and again which drives up markets just in time for quarterly earnings and dividends. Rinse and repeat. He can keep this gig going for ages.
Higher for Longer!"
Bank of England leaves interest rates at 5.25% but signals future cuts https://www.theguardian.com/business/2024/mar/21/bank-of-england-keeps-…
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