Summarised by Centrist
NZ’s economy appears to be in bad shape. Unemployment is up and GDP is down. There are hints it could get worse before it gets better.
RNZ’s money reporter says that when looking at the GDP per person, domestic inflation, the number of businesses closing, and unpaid debts, the economy is in an “undeniable downturn.”
Unfortunately, it is worse than it appears because the gross domestic product (GDP) figures suggest only a slight decline, but record immigration masks the true economic condition.
Thus, the economy’s apparent (albeit still deteriorating) stability is largely due to the increase in population, which creates more economic activity, rather than genuine economic growth per person.
Meanwhile, Jarrod Kerr, chief economist at Kiwibank, said that inflationary increases in local rates, rent and insurance are particularly sticky with interest rates likely to be higher for longer.
“People are spending less because they’ve been hit hard by inflation and higher interest rates,” said Kerr. Yet despite these pressures, prices continue to rise.
Also, debt is up, with around 463,000 consumers behind on credit repayments in March, up about 6000 on the month before.
Nearly 1.5 percent of mortgages are in arrears, and businesses are being liquidated at the highest rate for March since 2015 with government revenue tracking $1.6b below forecast.
