March 19, 2025 • 11 mins
A big bounce back for our economy, despite many sectors still doing it tough.
New Zealand's officially out of technical recession, with new GDP figures showing our economy grew 0.7% between October and December.
Economists had predicted a growth rate of just 0.3-to-0.5%.
NZ Herald Business Editor Liam Dann told Kerre Woodham while some areas still look gloomy, the bounce back from tourism and agriculture has been strong.
He says it looks like farmers will go a long way to saving us in this current cycle as well.
“Strong export prices combined with a good production season – that really makes a big difference.”
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the Kerry Wood of Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be good news, won't. New Zealand's rocketed out of
a technical recession. Latest GDP figures from statsn Zedge show
our economy grew zero point seven percent between October and December. Previously,
it had contracted to discuss Our business editor at largely
(00:30):
M Dan joins me in the studio. Now, very good
morning to you. Yes, y yay, goodness. Economic recovery day.
Doesn't feel like I've recovered.
Speaker 3 (00:40):
No, it's a bit of a surprise. It didn't really
feel like it. I mean, well, it's it's a in fact,
I think the Westpac senior economist Michael Cordon said it
was a genuine upside surprise. So that's solid. The economists
had been expecting sort of zero point three zero four percent, so.
Speaker 2 (00:58):
I thought they were expecting growth but little growth, and.
Speaker 3 (01:01):
So it's stronger than that. Maybe I'm thinking it doesn't
you know, like if you're feeling gloomy and you're in
a city, that might make a bit of sense that
the growth that the bounce back from tourism and strong agriculture,
you know, good export earnings and that sort of stuff
flowing through has been pretty strong, so i'd imagine and
(01:22):
where it's been weak is things like construction, which you
know really affects a place like Auckland. So maybe you know,
it's a case that you'd be forgiven for being more
surprised if you're in the cities.
Speaker 2 (01:35):
Well, imagine being in Wellington.
Speaker 3 (01:37):
Yeah, well that's right, Worrington doing very tough with that.
Speaker 2 (01:39):
I think we just need a round of a clause
for our dairy farms too, right throughout, all through COVID,
all through recessions, all through What on earth would New
Zealand And have done without them?
Speaker 3 (01:50):
Yeah, and I mean really looking like they're going to
go a long way to saving us again in this
cycle again. You know, Fonterra with a good result this
morning and just just you know, strong export prices combined
with a good production season that really makes a big
difference to the New Zealand economy. You know, it's it's
it's not you know, it's been a tough no doubt,
(02:13):
it's still a tough year. The annual figure will be
it's sort of negative one point one if you do
it for the cumulative cumulus of year or negative zero
point five if you compare it with the year earlier.
Speaker 2 (02:27):
But you know, I just I.
Speaker 3 (02:28):
Think we'll just take that. I mean, and it may
actually be I hope that that, you know, because in
the last few weeks has been some sort of fairly
gloomy consumer confidence stuff and I think the uncertainty around
the world, and you know, house prices haven't taken off
as quickly as people thought. There's been a bit of
negativity around the last few weeks. And I'm hopeful you
(02:49):
know that when we talk about in and out of recession,
it is all sort of a bit arbitrary. We you know,
these are various you know, economic categories and all that
sort of stuff, but it is there is a psychological
aspect to it totally. So I'm hopeful that that will
sort of click things into place.
Speaker 2 (03:05):
Do you think the economic summits sort of helped in
terms of it is all a confidence game, But do
you think that economic summits when when people are talking
about doing stuff and getting things done, and yes, it's
not shovels in the ground, but I.
Speaker 3 (03:18):
Think that has been positive. And you know, and boy
and an Indian trade deal would be so so a
little bit of momentum. I mean, I think people that
there's there's a couple of things. That the immigration rate
is still coming off, our net migration gain is still
coming down, and that's been a bit of a headwind,
and I think maybe that's you know, we've just seen
that house prices haven't sort of bounced as much as
(03:41):
people thought, and that's that's curbed a little bit of confidence.
I'm also hearing that, you know, people are holding on
to floating and short term fixed interest rates like six
months in order to try and lock in for a
better rate, and that's actually meant that a lot of
people are leaving savings on the table in the hope
of more to come.
Speaker 2 (03:59):
And you know, asp dropped there is this morning, the.
Speaker 3 (04:03):
Experts are saying that the you know, we're probably getting
to the point where it's time to look at locking
locking in longer term, and that means that you've actually
got a lot of people still to come down onto
you know, some lower rates that will put money in
their pockets. So that's going to be a positive in
the next next few months.
Speaker 2 (04:22):
It was interesting looking at those rates though from ASB
it was six months and four and five years there
weren't the one year in the two years there they're saying,
come on, put your money where your mouth is a customers.
Speaker 3 (04:33):
Try and get onto the one and too at the
last minute. Yeah, but yeah, it's been you know, it's
much higher if you're on a floating rate or a
six month at the moment, and so hopefully people will
feel confident enough to sort of come off those and
lock in some savings and that will put some money
in people's pockets too.
Speaker 2 (04:55):
Okay, so when we're talking about a recession, what's a
technical recession as opposed to a recession recession?
Speaker 3 (05:01):
Well, a recession recession is just when you feel like
you're going backwards and everybody feel like the country's going backwards.
It's it's a bit of a vibe thing.
Speaker 2 (05:08):
Really.
Speaker 3 (05:09):
There's a lot of different ways we could measure it.
But the technical recession is really just when we say
two quarters of contraction, and so two quarters are more
of contraction and you're in a recession. You can bounce
out if you if you only bounce out for a
quarter and it's not very strong growth, then it can
(05:30):
still feel very recessionary. So you know, it's this is
this is a pretty strong bounce. We're definitely out of
technical recession, but it is going to depend as to
say where you are and what industries you're in. Because
you look at construction and that was still down three
point one percent for the December quarter, so that that's
pretty rough and it had a rough quarter in September,
(05:52):
and so for the year, the annual average for construction
is down seven point three percent. And in an economy
like Auckland, that's pretty a pretty big deal and it
needs to sort of sort of hit a bottom and
confidence is to come back and hopefully we see some
you know, some some growth again. There I was I
(06:12):
think retail trade was was a pleasant surprise.
Speaker 2 (06:16):
Was that in December. Isn't that going to be Christmas shopping?
Speaker 3 (06:19):
Yeah, they seasonally adjust, these should be relative, but one
point nine up. I get the feeling that maybe that's
stalled a wee bit in the last few months, just
anecdotally from talking to people.
Speaker 2 (06:33):
I mean, I think until people get onto those lower
mortgage interest rates, there's not going to be the money
to buy stuff.
Speaker 3 (06:40):
Yeah, and there's a lot of uncertainty. I mean even
just what's happening in the just what's happening everything happening
in the world. You know, it's constant, you know, barrage
of stuff about the global economy, with trade wars and
people saying, you know that that was a slow down
and growth around the world. That sort of stuff doesn't help,
and if you're thinking about, you know, what you're doing
(07:01):
with your money, it might just make you more inclined
to keep saving. The other one, of course, is the
job market, and that takes longer to turn We know that,
and we're still looking at another maybe a few months
of where there we see unemployment rising until it sort
of hits a peak and starts to improve. And that
(07:22):
means that for some people there's job and security there,
and it also dampens the ability to sort of negotiate
probably for higher wages a bit. When the job market's
that tough, Certainly it makes it harder for people to
jump around jobs to push their wages up, so it'll
take a while for wage growth to come back as well.
And those things do affect consumer confidence.
Speaker 2 (07:43):
That and can you explain the the GDP per capita?
Speaker 3 (07:48):
Yeah, well this is a bit of a win, I guess,
because you know, people have said, well, look, you really
got to look at GDP per capita to get a
better sense of what's happening to the wealth of New Zealanders.
And that had been terrible, you know, because we'd partly
because part of the equation is just how the population
is growing. And we had that big boom in immigration,
large number over one hundred and thirty thousand net gain
(08:11):
of migrants at one point for the year two I
think October last year or something like that. It's dropped
away very fast and now we're down to a net
gain of around thirty two thousand on an annual basis
and it's falling. That's sort of historically getting into low
levels of migration gain, at least in recent history, and
(08:31):
that helps that sort of self corrects the equation for
per capita growth because if the population isn't growing particularly fast,
and when we divide the GDP by all the people
in the country, it starts to look a bit better.
But it was up and it was up by zero
point four percent for the quarter, and that was the
first time we've had per capita GDP growth for over
(08:53):
two years, So that's also something to be quite positive about.
Speaker 2 (08:58):
I think the other thing that really rips MI ninety
is when I was looking at the small business loans
and the amount outstanding there and the student loans. That
is so much money, so much money that has been
given to people who haven't paid it back. Three point
five billion dollars. What could we do with that?
Speaker 3 (09:20):
Yeah, I mean that remains a big issue in the economy.
Speaker 2 (09:24):
I mean we just dead to people who were just wraughters.
Remains a huge issue. I mean, and the fact that
we didn't have enough audits and checks and balances on that.
Speaker 3 (09:33):
Yeah. So this is three point five billion not being
paid back.
Speaker 2 (09:36):
Because yeah, I'm counting that up. This is the overdue
and admittedly with the overseas student the student loans, most
of those are overseas and have had penalties applied, which
inflates the figure. Crack, It's still money that's owed to
us as taxpayers, that's been given out willingly with no
attempt to get it back.
Speaker 1 (09:56):
Yeah.
Speaker 3 (09:56):
I mean it's a catch twenty two. Because the government's
so broken, it's struggling to invest in the ID which
needs to honey on it to actually enforce this time.
Speaker 2 (10:05):
I've ever said poor ird, but there we go. But
I mean, imagine what we could do with that money.
Speaker 3 (10:10):
Yeah, that's right. There's a lot of I mean, it's
a dilemma for the government, but this is a start
of them actually seeing the tax take rise, you know that.
So the fact that they've sort of taken over in
this recessionary period means that they've had to deal with
the tax take falling because there's just basically less money
coming and less you know, people are earning less money.
(10:31):
So you know, there there are some positive signs there.
You know, tourism, it's taken a long time to get
tourism back. It's still not quite back to sort of
pre COVID numbers of tourists, but by value, I've seen
figures suggesting that by value we are back at pre
COVID levels. But you know, really we should have had
growth all that through that period. So just to be
(10:51):
back at the start of twenty twenty is still a
long way behind the eight ball.
Speaker 2 (10:56):
We've worked very hard to stand still. I agree. And
in the meantime, thank you were going to our farmers
because without them, I kind of.
Speaker 3 (11:04):
Well, that really is and that looks from everything people
saying that looks like it could continue. We saw that
story from Jamie Gray the other day ten billion dollars
extra in the economy and if they can hold that price.
Speaker 2 (11:16):
Thank you so much, Liam dan Our, Business Editor at Large.
Speaker 1 (11:19):
For more from Kerry Wood and Mornings, listen live to
news Talks it'd be from nine am weekdays, or follow
the podcast on iHeartRadio.
You're listening to the Kerry Wood of Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be good news, won't. New Zealand's rocketed out of
a technical recession. Latest GDP figures from statsn Zedge show
our economy grew zero point seven percent between October and December. Previously,
it had contracted to discuss Our business editor at largely
(00:30):
M Dan joins me in the studio. Now, very good
morning to you. Yes, y yay, goodness. Economic recovery day.
Doesn't feel like I've recovered.
Speaker 3 (00:40):
No, it's a bit of a surprise. It didn't really
feel like it. I mean, well, it's it's a in fact,
I think the Westpac senior economist Michael Cordon said it
was a genuine upside surprise. So that's solid. The economists
had been expecting sort of zero point three zero four percent, so.
Speaker 2 (00:58):
I thought they were expecting growth but little growth, and.
Speaker 3 (01:01):
So it's stronger than that. Maybe I'm thinking it doesn't
you know, like if you're feeling gloomy and you're in
a city, that might make a bit of sense that
the growth that the bounce back from tourism and strong agriculture,
you know, good export earnings and that sort of stuff
flowing through has been pretty strong, so i'd imagine and
(01:22):
where it's been weak is things like construction, which you
know really affects a place like Auckland. So maybe you know,
it's a case that you'd be forgiven for being more
surprised if you're in the cities.
Speaker 2 (01:35):
Well, imagine being in Wellington.
Speaker 3 (01:37):
Yeah, well that's right, Worrington doing very tough with that.
Speaker 2 (01:39):
I think we just need a round of a clause
for our dairy farms too, right throughout, all through COVID,
all through recessions, all through What on earth would New
Zealand And have done without them?
Speaker 3 (01:50):
Yeah, and I mean really looking like they're going to
go a long way to saving us again in this
cycle again. You know, Fonterra with a good result this
morning and just just you know, strong export prices combined
with a good production season that really makes a big
difference to the New Zealand economy. You know, it's it's
it's not you know, it's been a tough no doubt,
(02:13):
it's still a tough year. The annual figure will be
it's sort of negative one point one if you do
it for the cumulative cumulus of year or negative zero
point five if you compare it with the year earlier.
Speaker 2 (02:27):
But you know, I just I.
Speaker 3 (02:28):
Think we'll just take that. I mean, and it may
actually be I hope that that, you know, because in
the last few weeks has been some sort of fairly
gloomy consumer confidence stuff and I think the uncertainty around
the world, and you know, house prices haven't taken off
as quickly as people thought. There's been a bit of
negativity around the last few weeks. And I'm hopeful you
(02:49):
know that when we talk about in and out of recession,
it is all sort of a bit arbitrary. We you know,
these are various you know, economic categories and all that
sort of stuff, but it is there is a psychological
aspect to it totally. So I'm hopeful that that will
sort of click things into place.
Speaker 2 (03:05):
Do you think the economic summits sort of helped in
terms of it is all a confidence game, But do
you think that economic summits when when people are talking
about doing stuff and getting things done, and yes, it's
not shovels in the ground, but I.
Speaker 3 (03:18):
Think that has been positive. And you know, and boy
and an Indian trade deal would be so so a
little bit of momentum. I mean, I think people that
there's there's a couple of things. That the immigration rate
is still coming off, our net migration gain is still
coming down, and that's been a bit of a headwind,
and I think maybe that's you know, we've just seen
that house prices haven't sort of bounced as much as
(03:41):
people thought, and that's that's curbed a little bit of confidence.
I'm also hearing that, you know, people are holding on
to floating and short term fixed interest rates like six
months in order to try and lock in for a
better rate, and that's actually meant that a lot of
people are leaving savings on the table in the hope
of more to come.
Speaker 2 (03:59):
And you know, asp dropped there is this morning, the.
Speaker 3 (04:03):
Experts are saying that the you know, we're probably getting
to the point where it's time to look at locking
locking in longer term, and that means that you've actually
got a lot of people still to come down onto
you know, some lower rates that will put money in
their pockets. So that's going to be a positive in
the next next few months.
Speaker 2 (04:22):
It was interesting looking at those rates though from ASB
it was six months and four and five years there
weren't the one year in the two years there they're saying,
come on, put your money where your mouth is a customers.
Speaker 3 (04:33):
Try and get onto the one and too at the
last minute. Yeah, but yeah, it's been you know, it's
much higher if you're on a floating rate or a
six month at the moment, and so hopefully people will
feel confident enough to sort of come off those and
lock in some savings and that will put some money
in people's pockets too.
Speaker 2 (04:55):
Okay, so when we're talking about a recession, what's a
technical recession as opposed to a recession recession?
Speaker 3 (05:01):
Well, a recession recession is just when you feel like
you're going backwards and everybody feel like the country's going backwards.
It's it's a bit of a vibe thing.
Speaker 2 (05:08):
Really.
Speaker 3 (05:09):
There's a lot of different ways we could measure it.
But the technical recession is really just when we say
two quarters of contraction, and so two quarters are more
of contraction and you're in a recession. You can bounce
out if you if you only bounce out for a
quarter and it's not very strong growth, then it can
(05:30):
still feel very recessionary. So you know, it's this is
this is a pretty strong bounce. We're definitely out of
technical recession, but it is going to depend as to
say where you are and what industries you're in. Because
you look at construction and that was still down three
point one percent for the December quarter, so that that's
pretty rough and it had a rough quarter in September,
(05:52):
and so for the year, the annual average for construction
is down seven point three percent. And in an economy
like Auckland, that's pretty a pretty big deal and it
needs to sort of sort of hit a bottom and
confidence is to come back and hopefully we see some
you know, some some growth again. There I was I
(06:12):
think retail trade was was a pleasant surprise.
Speaker 2 (06:16):
Was that in December. Isn't that going to be Christmas shopping?
Speaker 3 (06:19):
Yeah, they seasonally adjust, these should be relative, but one
point nine up. I get the feeling that maybe that's
stalled a wee bit in the last few months, just
anecdotally from talking to people.
Speaker 2 (06:33):
I mean, I think until people get onto those lower
mortgage interest rates, there's not going to be the money
to buy stuff.
Speaker 3 (06:40):
Yeah, and there's a lot of uncertainty. I mean even
just what's happening in the just what's happening everything happening
in the world. You know, it's constant, you know, barrage
of stuff about the global economy, with trade wars and
people saying, you know that that was a slow down
and growth around the world. That sort of stuff doesn't help,
and if you're thinking about, you know, what you're doing
(07:01):
with your money, it might just make you more inclined
to keep saving. The other one, of course, is the
job market, and that takes longer to turn We know that,
and we're still looking at another maybe a few months
of where there we see unemployment rising until it sort
of hits a peak and starts to improve. And that
(07:22):
means that for some people there's job and security there,
and it also dampens the ability to sort of negotiate
probably for higher wages a bit. When the job market's
that tough, Certainly it makes it harder for people to
jump around jobs to push their wages up, so it'll
take a while for wage growth to come back as well.
And those things do affect consumer confidence.
Speaker 2 (07:43):
That and can you explain the the GDP per capita?
Speaker 3 (07:48):
Yeah, well this is a bit of a win, I guess,
because you know, people have said, well, look, you really
got to look at GDP per capita to get a
better sense of what's happening to the wealth of New Zealanders.
And that had been terrible, you know, because we'd partly
because part of the equation is just how the population
is growing. And we had that big boom in immigration,
large number over one hundred and thirty thousand net gain
(08:11):
of migrants at one point for the year two I
think October last year or something like that. It's dropped
away very fast and now we're down to a net
gain of around thirty two thousand on an annual basis
and it's falling. That's sort of historically getting into low
levels of migration gain, at least in recent history, and
(08:31):
that helps that sort of self corrects the equation for
per capita growth because if the population isn't growing particularly fast,
and when we divide the GDP by all the people
in the country, it starts to look a bit better.
But it was up and it was up by zero
point four percent for the quarter, and that was the
first time we've had per capita GDP growth for over
(08:53):
two years, So that's also something to be quite positive about.
Speaker 2 (08:58):
I think the other thing that really rips MI ninety
is when I was looking at the small business loans
and the amount outstanding there and the student loans. That
is so much money, so much money that has been
given to people who haven't paid it back. Three point
five billion dollars. What could we do with that?
Speaker 3 (09:20):
Yeah, I mean that remains a big issue in the economy.
Speaker 2 (09:24):
I mean we just dead to people who were just wraughters.
Remains a huge issue. I mean, and the fact that
we didn't have enough audits and checks and balances on that.
Speaker 3 (09:33):
Yeah. So this is three point five billion not being
paid back.
Speaker 2 (09:36):
Because yeah, I'm counting that up. This is the overdue
and admittedly with the overseas student the student loans, most
of those are overseas and have had penalties applied, which
inflates the figure. Crack, It's still money that's owed to
us as taxpayers, that's been given out willingly with no
attempt to get it back.
Speaker 1 (09:56):
Yeah.
Speaker 3 (09:56):
I mean it's a catch twenty two. Because the government's
so broken, it's struggling to invest in the ID which
needs to honey on it to actually enforce this time.
Speaker 2 (10:05):
I've ever said poor ird, but there we go. But
I mean, imagine what we could do with that money.
Speaker 3 (10:10):
Yeah, that's right. There's a lot of I mean, it's
a dilemma for the government, but this is a start
of them actually seeing the tax take rise, you know that.
So the fact that they've sort of taken over in
this recessionary period means that they've had to deal with
the tax take falling because there's just basically less money
coming and less you know, people are earning less money.
(10:31):
So you know, there there are some positive signs there.
You know, tourism, it's taken a long time to get
tourism back. It's still not quite back to sort of
pre COVID numbers of tourists, but by value, I've seen
figures suggesting that by value we are back at pre
COVID levels. But you know, really we should have had
growth all that through that period. So just to be
(10:51):
back at the start of twenty twenty is still a
long way behind the eight ball.
Speaker 2 (10:56):
We've worked very hard to stand still. I agree. And
in the meantime, thank you were going to our farmers
because without them, I kind of.
Speaker 3 (11:04):
Well, that really is and that looks from everything people
saying that looks like it could continue. We saw that
story from Jamie Gray the other day ten billion dollars
extra in the economy and if they can hold that price.
Speaker 2 (11:16):
Thank you so much, Liam dan Our, Business Editor at Large.
Speaker 1 (11:19):
For more from Kerry Wood and Mornings, listen live to
news Talks it'd be from nine am weekdays, or follow
the podcast on iHeartRadio.
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