Nuts and bolts of the NZ economy right now

Written By Kim Manunui

While emphasising positive expectations can help to build confidence in our future outlook, we also need to look at the hard data to see where we’re at and understand the real position we’re in right now, so here’s a bit of a look at some of that stuff.

With a Financial Stability Report released by the Reserve Bank ( RBNZ ) on May 1st and todays GDP announcement we can see we’re tracking along as expected for the stage we’re at in the aftermath of the Covid era hangover … we’re working our way out of it nicely to a positive outcome as expected and soon it will all be a distant memory.

A few notes from the RBNZ Financial Stability Report released 01 May 2024

  • Most mortgage borrowers have now repriced onto higher interest rates as expected, with rising nominal incomes helping many households navigate this transition. However, some are doing it tough and reducing their spending or extending their repayment timelines in order to make ends meet, and a number of households are also facing heightened job uncertainty.

  • Some businesses face ongoing pressure from increased costs and reduced economic activity. While non-performing loans to businesses have increased, they remain low by historical standards such as the 08 GFC. Near-term risks to the agricultural sector have also eased following the recent recovery in dairy prices.

  • Global inflation is declining from elevated levels however there remains a risk that new or persistent inflation pressures could mean global interest rates remain restrictive for longer, placing continued pressure on households, businesses and the financial system.

  • New Zealand’s financial system remains well placed to handle a range of severe scenarios.

  • Banks’ capital ratios have increased and liquidity positions remain strong.

  • Dwelling insurance has become more expensive or unavailable in some locations. A trend towards risk-based pricing is providing a strong signal to property owners to proactively manage flood and earthquake-related risks. Our recent climate stress test highlighted the importance for banks to also manage their exposure to climate-related risks.

Here’s a link to a short video that explains the Financial Stability Report with 5 things you should know.

Here’s a link to the Financial Stability Report itself if you like a bit of dry reading.

Now for the Gross Domestic Product ( GDP ) report released today 20th June 2024

Technically we climbed out of recession today with the release of the March 2024 quarter GDP figures showing a rise of 0.2% from figures released 20th June 2024 by Stats NZ.

A recession is generally defined as two consecutive quarters where the economy contracts which was the case for the last two quarters of Dec and Sep 23.

Citing a range of results at an industry level with eight out of 16 industries rising being seen in rental, hiring, and real estate services (up 0.9%), and a 2.9% increase across electricity, gas, water, and waste services. There were also falls in several industries, including construction and business services. While manufacturing fell overall, food and beverage manufacturing was up, reflected in a rise of dairy product exports, such as milk powder.

So great news, we’re on our way back … click here to the Stats NZ announcement for all the dry stuff.

Summation

So all in all, as we track along through the year, we’re getting there, slowly but surely, bit more restrictive economics to go through yet on the road back to 2% inflation and impending OCR / interest rate cuts which we’re expecting later this year to early 2025 but not as bad as it has been previously this century so we’re okay, just need to keep our chin up and a level head, don’t do anything crazy and we’ll see some easing coming through in the near future.

Kim Manunui

Hi, I’m Kim and I work with a great team to help individuals, as well as small and not so small businesses get their message, product and services to the world using digital media and creating wonderful websites that don’t cost the earth.

I was born in Canada, and grew up around Vancouver and the mountains of British Columbia. My love of pristine environments led me to New Zealand and eventually to the mountains, lakes and rivers of the central North Island which is home. My family’s heritage is here, and it’s from here that Korio traverses the planet.

The digital world is never static and neither are we.

And I say ‘we’ because I work with an awesome group of talented people who I gather together as required to complete a project.  Whatever your business, not-for-profit or individual needs are we gather the best team to get the job done.

Collaboratively we are creative, share sustainable values and work hard for great outcomes because that’s the buzz of satisfaction that drives us.

If you have an audience and market to reach, we can make that happen. Creative design, words that work and smart behind the scenes stuff that cuts through the online noise. We’ll design your website and then build it. We’ll manage the content as well as all your hosting needs. We can handle your online advertising so you get noticed,
and we’ll manage your social media presence so you get the clicks, likes and engagement to grow your business. All within the budget you set, because none of this needs to cost the earth.  And the job doesn’t stop when your website goes live. We are your virtual business partner.

https://www.korio.co.nz
Previous

Night and Day – shortest day of the year
Next

Returning NZ’s rockstar economy