December 17, 2025 • 11 mins
New Zealand's economy grew more than expected between July and September.
But between April and June, it shrank more than previously thought.
GDP rose 1.1% in the September quarter, surpassing all expectation but Stats NZ has revised the numbers for the June quarter, finding GDP actually fell 1%, not the previously-reported 0.9%.
That means the economy shrank 0.5% in the year to September.
NZ Herald Business Editor Liam Dann told Kerre Woodham the data is showing there’s some momentum in the economy, especially within manufacturing and business services.
He says consumers take a bit longer to feel upbeat, but the business core of the economy is picking up.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
You're listening to a podcast from News Talk zed B.
Follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
As you will have heard, news New Zealand's economy is
officially in rebound. Data just out from Statscene's ed shows
GDP rose one point one percent in the three months
to September. The Reserve Bank had been forecasting a growth
rate of about zero point four percent. Economists had been
expecting it to sit around zero point nine. But here
we are one point one. New Zealand Herald Business editor
(00:40):
at largely M Dan Good morning.
Speaker 3 (00:41):
To you, morning carry.
Speaker 2 (00:43):
Nice to have you back again.
Speaker 3 (00:44):
Yeah, yeah, well with some good news, I think, yeah, yeah,
I mean let's just take that as good news. I mean,
there's all sorts of caveats. I'm going to sort of
add to it.
Speaker 2 (00:51):
Go on, you come on, you're.
Speaker 3 (00:53):
It was stronger than we expected, and that means I
guess that, you know, we can say there is a
recovery underway. They revised the second quarter as expected, but
they revised it downwards. Wow, so this SEK quarter was
slightly you know these I wouldn't get hung up on
decimal points too much, but it was. It was previously
(01:16):
they thought it was zero point nine down for the
second quarter. It turned out to be one percent down.
Given that people thought that was going to be revised up,
that just tells us that I think that the second
quarter was as horrible as it felt. Too many businesses
and but it you know, it's it's what the data
is showing there today is some momentum, especially in manufacturing
(01:38):
and business services, you know, so it's that business y
core of the economy that's picking up. The consumer end
was was just up, like there was a little bit
of life and household spending and consumer spending, I think
it was. I saw a zero point one percent growth,
But that's better than going backwards. We knew that the
(01:59):
consumers take a bit longer to feel upbeat, and we
see it in the confidence surveys. But yeah, all up
that that's a pretty good number. It needs to be sustained. Obviously,
we don't want to keep bouncing round. But I would
imagine I think we've already had the press release from
the Prime Minister and the Finance Minister will be following saying, look,
it's all happening, so hopefully it is.
Speaker 2 (02:22):
How do the Reserve Bank get it's so roll. That's
a bit alarming, isn't it. Yeah, surprised did.
Speaker 3 (02:28):
Not upgrade it at their last in ps in November
because that was late November, Like like Treasury can you
know quite often has it terribly wrong because they only
sort of do it every six months their forecasts and
that they But yeah, I thought they stayed. I guess
better to be conservative if you're the Reserve Bank. But
(02:48):
there were some signs of green shoots, which the Reserve
Bank talked about and it's in its monetary policy statements.
I'm not sure why they stayed so gloomy on what
they thought the GDP growth would be. The bank economists
went far off, so you know, picks between zero point
eight and zero point and one percent. I think A
and Z picked one per cent more or less. They
(03:10):
got they got the trend right. It's a bit like
the weather forecasts. You can tell you if it's going
to rain or not, but not exactly when the rain's
going to arrive. And you know, that's now the best
we can expect from forecasts.
Speaker 2 (03:20):
I can't remember if I said we would talk about
it today.
Speaker 3 (03:23):
Or if there was something we were going to come
back to.
Speaker 2 (03:27):
I think it was the fact that you had a
a contributor to your columns say, is GDP a good measure?
Speaker 3 (03:35):
Yes, Oh that's right.
Speaker 2 (03:37):
That's what we were going to talk about, wasn't it.
Speaker 1 (03:39):
Yeah.
Speaker 3 (03:39):
Yeah, And so some people are very quick to say,
and quite rightly, look what's happening with GDP per capita
because it gets flatted by population growth. We don't have
that much population growth at the moment, so that's solving
that problem. So GDP per capital was zero point nine
percent this time, So that's the best GDP per capita
(03:59):
result we've had for probably years. But it's partly a
symptom of the fact that our population is growing. So
the two numbers are a little bit more in sync.
And we had a decent sized fall and per capita growth,
but per capita growth is probably a better approximation of
what individuals might be feeling. But you know, GDP still
(04:20):
falls down in the sense that it's a big aggregate number.
It doesn't measure the inequality of growth and all that
sort of stuff. So you know, you could have, you know,
the kind of economy where one sector was just booming. Well,
we kind of have with that agriculture exactly, and those
people could be making lots of money and spending money,
and there could be a whole bunch of people not
(04:41):
doing well and the number on aggregate would look quite
good even on a per capita basis potentially, So perhaps
there is a bit of that. Certainly, that is the
case that the you know, we know that Auckland and
Wellington are lagging and that people are feeling a bit
gloomier there, but you get to Canterbury, you Tago Southland,
you can see it in house prices and confidence that
(05:02):
things are moving more. And that's agriculturally related to agricultural
exports and farmers and all that stuff, and maybe maybe
tourism coming back as well. So that is all quite positive.
You'd expect it to spread through the cities, hopefully with
interest rates being a bit lower AND's.
Speaker 2 (05:21):
Going back up again.
Speaker 3 (05:22):
Well, yeah, there's been these movements because of the wholesale
markets and the retail banks haven't mucked around and making
sure they maintain their margins and their profits, which has
you know, copped a bit of flack. But I don't
think the ocr will be quick to you know, they'll
be quick to move the OCR So you should see
(05:42):
you know, so the readjustment of the longer term rates
especially so there's been some the banks will say, oh,
well we cut the six month rate yeh, because they
want you to take the cheap rate because they know
it's going to be worse later. But the longer term rates, well,
you know, if the economy continues to improve, the next
move of the ocr will probably be up to sort
of get it back into neutral because we're in a
(06:04):
sort of stimulatory phase at the moment. And there's a
bit of debate on markets whether that's sort of middle
next year or late next year or you know, and
that'll depend on how the economy progresses. But because the
market generally sees it happening later next year, anyone who's
going to fix for longer than a year is going
(06:24):
to see those longer term rates just just edge up slightly.
So it's more about the window to lock in for
the absolute lowest rate having sort of passed. It was
a very tiny window.
Speaker 2 (06:33):
Yeah, you're still.
Speaker 3 (06:36):
Going to see a lot of people coming off higher rates,
you know, if if her are on the two year
fixed and if they'll be coming up in the next
six months or so, and that that still flows through
the economists still think we're going to see a fair
bit of flow through for kiwis coming off sort of
the one year, eighteen month two year fixed rates. If
they were clever enough to do a five year fix
(06:57):
fixed rate way back in the COVID gloom, then they
may actually be going up at the moment, but they'll
have hopefully banked all those you know, returns from being
at a super rate for the last five years.
Speaker 2 (07:10):
Andrew says much the same good news about the GDP growth,
but once again, the Reserve Bank is miles out on
its projection. So let's hope the new Swedish governor in
future will be much more astute in determining the bank's forecast,
because if they do miss the mark by so much,
how can we have faith in future projections?
Speaker 3 (07:27):
Don't have much faith in forecasts at all. Wild anybody's forecasts. Well,
I mean, I still look at my Apple weather app
and it says, oh, it's it's no rain today, and
I look at the window and it's actually raining, and
I still look at the app. It's hopeless. So so
just but similarly with economic forecasts, and I've looked at
(07:48):
the academic research on this, they're not bad in the
sort of a few months up to about one quarter out.
They can pick the direction. The more specific they have
to be, the worse they are. So I mean, I
guess the Reserve Bank pick GDP would grow so it
got the direction of travel right, and you get out
much further other than half a year, and they're absolutely useless.
(08:12):
I mean, so when you see Treasury picking what's going
to happen to house prices in twenty twenty eight, it's
just box ticking. It's just filling in a box because
they have to do that because the government needs something
to work off with its budget projections. But there is
no way an economist can pick what's say.
Speaker 2 (08:30):
Why are we picking surpluses? And times of when we're
going to get.
Speaker 3 (08:34):
All of that will change around, you know. What you'll
see is that there'll be a long period of, oh,
we're doing better than treasury forecasts. We're doing worse than
Treasury forecasts. I mean, I guess where it's needing something
to hang on to as a baseline, you know, something
our best guess. But yeah, I think long term forecasts
(08:56):
are really not worth betting on if you're thinking about
your own personal circuit. Something will happen. You know, at
some point in the next four years, there will be
a Wall Street crash, or there.
Speaker 2 (09:07):
Will be an airah yeah, yeah, or something good could happen.
Speaker 3 (09:10):
AI might deliver the amazing productivity gains that we all want,
and we might all discover that, you know, the economy
is more productive than we thought it was going to be.
Things that are unexpected happen all the time. That's life,
and you know, you can you can only you know.
I think that the further you get it out with forecasts,
the less seriously you should take them. They can be
(09:31):
useful for a bit of context. And I don't know,
but yeah, I think pointless once you get out beyond
a year or so. It's yeah, what's.
Speaker 2 (09:41):
Kind of doing yourself out of a job.
Speaker 1 (09:42):
Isn't it?
Speaker 3 (09:43):
Well, I don't. To me, economics isn't you know. People
love predictions and forecasts and maybe they're fun, maybe they're
part of the game, but it's to me, it's more
about having the context to understand what's happening in the
world around you, and economics is such a big part
of the world around us. We need a framework to
know which direction we're traveling and that sort of thing.
(10:04):
So it is you do want to look out to
twenty twenty six and think, I you know, if you've
got a business, I look, it looks like it's growing.
You know, the economy is growing. It looks like the
growth will continue for a while. There are some basic things,
so now it's time to think about the opportunity, the
chance to invest, whereas you know, a couple of years
(10:24):
ago it was time to think about battening down the
hatches and contracting and that sort of stuff. Is useful,
but you just have to keep it in context of
your own experience. So I do think, you know, economics
has some real value, but I just always advise people
not to treat it as gospel or something.
Speaker 2 (10:42):
Science and exact sciences.
Speaker 3 (10:43):
Not an exact science, and certainly sometimes it gets treated
as a religion, and I think that's like these are
soothsayers who sort of predict the future in a crystal
ball for us, and that that's not the case as
everyone has seen over the past few years.
Speaker 2 (10:57):
Well, thank you so much. I mean, whether it's an
exact science or not, I always enjoy hearing what you
have to say, and you're very relatable and make it
really really interesting, even to somebody who got fifty six
percent and school see maths.
Speaker 3 (11:11):
Yeah, well that's right. Don't ask me about six form maths.
But thanks Kerrie, you know, always great to chat and
Merry Christmas to everybody.
Speaker 2 (11:19):
Merry Christmas to you.
Speaker 1 (11:21):
For more from News Talks at b listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio
You're listening to a podcast from News Talk zed B.
Follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
As you will have heard, news New Zealand's economy is
officially in rebound. Data just out from Statscene's ed shows
GDP rose one point one percent in the three months
to September. The Reserve Bank had been forecasting a growth
rate of about zero point four percent. Economists had been
expecting it to sit around zero point nine. But here
we are one point one. New Zealand Herald Business editor
(00:40):
at largely M Dan Good morning.
Speaker 3 (00:41):
To you, morning carry.
Speaker 2 (00:43):
Nice to have you back again.
Speaker 3 (00:44):
Yeah, yeah, well with some good news, I think, yeah, yeah,
I mean let's just take that as good news. I mean,
there's all sorts of caveats. I'm going to sort of
add to it.
Speaker 2 (00:51):
Go on, you come on, you're.
Speaker 3 (00:53):
It was stronger than we expected, and that means I
guess that, you know, we can say there is a
recovery underway. They revised the second quarter as expected, but
they revised it downwards. Wow, so this SEK quarter was
slightly you know these I wouldn't get hung up on
decimal points too much, but it was. It was previously
(01:16):
they thought it was zero point nine down for the
second quarter. It turned out to be one percent down.
Given that people thought that was going to be revised up,
that just tells us that I think that the second
quarter was as horrible as it felt. Too many businesses
and but it you know, it's it's what the data
is showing there today is some momentum, especially in manufacturing
(01:38):
and business services, you know, so it's that business y
core of the economy that's picking up. The consumer end
was was just up, like there was a little bit
of life and household spending and consumer spending, I think
it was. I saw a zero point one percent growth,
But that's better than going backwards. We knew that the
(01:59):
consumers take a bit longer to feel upbeat, and we
see it in the confidence surveys. But yeah, all up
that that's a pretty good number. It needs to be sustained. Obviously,
we don't want to keep bouncing round. But I would
imagine I think we've already had the press release from
the Prime Minister and the Finance Minister will be following saying, look,
it's all happening, so hopefully it is.
Speaker 2 (02:22):
How do the Reserve Bank get it's so roll. That's
a bit alarming, isn't it. Yeah, surprised did.
Speaker 3 (02:28):
Not upgrade it at their last in ps in November
because that was late November, Like like Treasury can you
know quite often has it terribly wrong because they only
sort of do it every six months their forecasts and
that they But yeah, I thought they stayed. I guess
better to be conservative if you're the Reserve Bank. But
(02:48):
there were some signs of green shoots, which the Reserve
Bank talked about and it's in its monetary policy statements.
I'm not sure why they stayed so gloomy on what
they thought the GDP growth would be. The bank economists
went far off, so you know, picks between zero point
eight and zero point and one percent. I think A
and Z picked one per cent more or less. They
(03:10):
got they got the trend right. It's a bit like
the weather forecasts. You can tell you if it's going
to rain or not, but not exactly when the rain's
going to arrive. And you know, that's now the best
we can expect from forecasts.
Speaker 2 (03:20):
I can't remember if I said we would talk about
it today.
Speaker 3 (03:23):
Or if there was something we were going to come
back to.
Speaker 2 (03:27):
I think it was the fact that you had a
a contributor to your columns say, is GDP a good measure?
Speaker 3 (03:35):
Yes, Oh that's right.
Speaker 2 (03:37):
That's what we were going to talk about, wasn't it.
Speaker 1 (03:39):
Yeah.
Speaker 3 (03:39):
Yeah, And so some people are very quick to say,
and quite rightly, look what's happening with GDP per capita
because it gets flatted by population growth. We don't have
that much population growth at the moment, so that's solving
that problem. So GDP per capital was zero point nine
percent this time, So that's the best GDP per capita
(03:59):
result we've had for probably years. But it's partly a
symptom of the fact that our population is growing. So
the two numbers are a little bit more in sync.
And we had a decent sized fall and per capita growth,
but per capita growth is probably a better approximation of
what individuals might be feeling. But you know, GDP still
(04:20):
falls down in the sense that it's a big aggregate number.
It doesn't measure the inequality of growth and all that
sort of stuff. So you know, you could have, you know,
the kind of economy where one sector was just booming. Well,
we kind of have with that agriculture exactly, and those
people could be making lots of money and spending money,
and there could be a whole bunch of people not
(04:41):
doing well and the number on aggregate would look quite
good even on a per capita basis potentially, So perhaps
there is a bit of that. Certainly, that is the
case that the you know, we know that Auckland and
Wellington are lagging and that people are feeling a bit
gloomier there, but you get to Canterbury, you Tago Southland,
you can see it in house prices and confidence that
(05:02):
things are moving more. And that's agriculturally related to agricultural
exports and farmers and all that stuff, and maybe maybe
tourism coming back as well. So that is all quite positive.
You'd expect it to spread through the cities, hopefully with
interest rates being a bit lower AND's.
Speaker 2 (05:21):
Going back up again.
Speaker 3 (05:22):
Well, yeah, there's been these movements because of the wholesale
markets and the retail banks haven't mucked around and making
sure they maintain their margins and their profits, which has
you know, copped a bit of flack. But I don't
think the ocr will be quick to you know, they'll
be quick to move the OCR So you should see
(05:42):
you know, so the readjustment of the longer term rates
especially so there's been some the banks will say, oh,
well we cut the six month rate yeh, because they
want you to take the cheap rate because they know
it's going to be worse later. But the longer term rates, well,
you know, if the economy continues to improve, the next
move of the ocr will probably be up to sort
of get it back into neutral because we're in a
(06:04):
sort of stimulatory phase at the moment. And there's a
bit of debate on markets whether that's sort of middle
next year or late next year or you know, and
that'll depend on how the economy progresses. But because the
market generally sees it happening later next year, anyone who's
going to fix for longer than a year is going
(06:24):
to see those longer term rates just just edge up slightly.
So it's more about the window to lock in for
the absolute lowest rate having sort of passed. It was
a very tiny window.
Speaker 2 (06:33):
Yeah, you're still.
Speaker 3 (06:36):
Going to see a lot of people coming off higher rates,
you know, if if her are on the two year
fixed and if they'll be coming up in the next
six months or so, and that that still flows through
the economists still think we're going to see a fair
bit of flow through for kiwis coming off sort of
the one year, eighteen month two year fixed rates. If
they were clever enough to do a five year fix
(06:57):
fixed rate way back in the COVID gloom, then they
may actually be going up at the moment, but they'll
have hopefully banked all those you know, returns from being
at a super rate for the last five years.
Speaker 2 (07:10):
Andrew says much the same good news about the GDP growth,
but once again, the Reserve Bank is miles out on
its projection. So let's hope the new Swedish governor in
future will be much more astute in determining the bank's forecast,
because if they do miss the mark by so much,
how can we have faith in future projections?
Speaker 3 (07:27):
Don't have much faith in forecasts at all. Wild anybody's forecasts. Well,
I mean, I still look at my Apple weather app
and it says, oh, it's it's no rain today, and
I look at the window and it's actually raining, and
I still look at the app. It's hopeless. So so
just but similarly with economic forecasts, and I've looked at
(07:48):
the academic research on this, they're not bad in the
sort of a few months up to about one quarter out.
They can pick the direction. The more specific they have
to be, the worse they are. So I mean, I
guess the Reserve Bank pick GDP would grow so it
got the direction of travel right, and you get out
much further other than half a year, and they're absolutely useless.
(08:12):
I mean, so when you see Treasury picking what's going
to happen to house prices in twenty twenty eight, it's
just box ticking. It's just filling in a box because
they have to do that because the government needs something
to work off with its budget projections. But there is
no way an economist can pick what's say.
Speaker 2 (08:30):
Why are we picking surpluses? And times of when we're
going to get.
Speaker 3 (08:34):
All of that will change around, you know. What you'll
see is that there'll be a long period of, oh,
we're doing better than treasury forecasts. We're doing worse than
Treasury forecasts. I mean, I guess where it's needing something
to hang on to as a baseline, you know, something
our best guess. But yeah, I think long term forecasts
(08:56):
are really not worth betting on if you're thinking about
your own personal circuit. Something will happen. You know, at
some point in the next four years, there will be
a Wall Street crash, or there.
Speaker 2 (09:07):
Will be an airah yeah, yeah, or something good could happen.
Speaker 3 (09:10):
AI might deliver the amazing productivity gains that we all want,
and we might all discover that, you know, the economy
is more productive than we thought it was going to be.
Things that are unexpected happen all the time. That's life,
and you know, you can you can only you know.
I think that the further you get it out with forecasts,
the less seriously you should take them. They can be
(09:31):
useful for a bit of context. And I don't know,
but yeah, I think pointless once you get out beyond
a year or so. It's yeah, what's.
Speaker 2 (09:41):
Kind of doing yourself out of a job.
Speaker 1 (09:42):
Isn't it?
Speaker 3 (09:43):
Well, I don't. To me, economics isn't you know. People
love predictions and forecasts and maybe they're fun, maybe they're
part of the game, but it's to me, it's more
about having the context to understand what's happening in the
world around you, and economics is such a big part
of the world around us. We need a framework to
know which direction we're traveling and that sort of thing.
(10:04):
So it is you do want to look out to
twenty twenty six and think, I you know, if you've
got a business, I look, it looks like it's growing.
You know, the economy is growing. It looks like the
growth will continue for a while. There are some basic things,
so now it's time to think about the opportunity, the
chance to invest, whereas you know, a couple of years
(10:24):
ago it was time to think about battening down the
hatches and contracting and that sort of stuff. Is useful,
but you just have to keep it in context of
your own experience. So I do think, you know, economics
has some real value, but I just always advise people
not to treat it as gospel or something.
Speaker 2 (10:42):
Science and exact sciences.
Speaker 3 (10:43):
Not an exact science, and certainly sometimes it gets treated
as a religion, and I think that's like these are
soothsayers who sort of predict the future in a crystal
ball for us, and that that's not the case as
everyone has seen over the past few years.
Speaker 2 (10:57):
Well, thank you so much. I mean, whether it's an
exact science or not, I always enjoy hearing what you
have to say, and you're very relatable and make it
really really interesting, even to somebody who got fifty six
percent and school see maths.
Speaker 3 (11:11):
Yeah, well that's right. Don't ask me about six form maths.
But thanks Kerrie, you know, always great to chat and
Merry Christmas to everybody.
Speaker 2 (11:19):
Merry Christmas to you.
Speaker 1 (11:21):
For more from News Talks at b listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio
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