June 18, 2025 • 8 mins
GDP figures just out are stronger than economists had forecast.
Stats NZ says New Zealand's gross domestic product grew 0.8% in the March quarter – overtaking predictions of 0.7%.
It follows a 0.5% increase the quarter before.
Herald Business Editor-at-Large Liam Dann told Kerre Woodham it could mean the OCR won't get another cut next month.
He says it raises the odds the Reserve Bank will keep things on hold.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
You're listening to the carry Wood and Morning's podcast from
news Talks, he'd be.
Speaker 2 (00:11):
As you will have heard on our news the GDP
grew at zero point eight percent in the first quarter
of twenty five, stronger than even the most optimistic of
economists forecast. And you wouldn't describe economists as a naturally
optimistic cherry lot, really, would you. Activity increased in the
March twenty five quarter across all three high level industry
(00:33):
groups primary industries, goods producing industries and service industries. I'm
joined as ever after our GDP announcements by New Zealand
Herald Business editor at largely and Dan good morning, hell
carry oh, the excitement, the joy, Yeah.
Speaker 3 (00:50):
Yeah, I mean, if you talk to an economists for
any length of time about this, I'm sure they're going
to find some things to tell you that aren't so chery.
But you know, look that numbers are a good, strong number.
So that's it is better than expected.
Speaker 2 (01:04):
That's the price of our butter, isn't it.
Speaker 3 (01:06):
Yeah, that's right. There's agricultural production brings with it an
increase in manufacturing and all that sort of stuff, and
so it was a strong it was a strong quarter.
But then they have downgraded the quarter before that we
thought was zero point seven percent rise. That turns out
because when they go through the numbers, you know often
(01:27):
they change, so you know this current quarter could be
downgraded or upgraded, so you need to keep that in content.
Speaker 2 (01:33):
What do you think is going to happen?
Speaker 3 (01:36):
Well, I think they were expecting a strong quarter, so
you know, it's it's it's good that it was. We
on the Herald website immediately have leapt to as we
do interest rates, and it probably raises the odds that
the Reserve Bank will leave things on hold in July.
(01:56):
So if you're hanging in there for another cart it
maybe isn't isn't such great news. But they are getting
a lot of mixed signals at the moment.
Speaker 2 (02:05):
They aren't they And that's what they're saying. And you're
seeing it in surveys too.
Speaker 3 (02:09):
Yeah, oh absolutely. I mean sometimes you'll see a survey
and say, oh, people are feeling more upbeat, and then
other times you'll see some very gloomy ones. There was
some data in the last week or so that the
economists do take very seriously, which was the performance of
Services Index and the performance of Manufacturing Index. For May,
and they both slipped back into negative recessionary territory. And
(02:31):
actually services had been there the whole way through pretty much,
but manufacturing had lifted and it had come down again,
so that worried some economists had the benz Ed guy
Dug Steel saying that he feels that the recoveries had
a brick wall. And yeah, and consumer spending has still
been quite sluggish.
Speaker 2 (02:48):
So these we can hardly blame the poor old consumers,
can you? Who are justice right? Who are going to
get the car repairs that they've been putting off and
putting off while the mortgage inter threats were so high.
They'll pay those will maybe buy a new car or
that they've been holding on, but they're not going to
be spend thrifts. With the way the world is.
Speaker 3 (03:06):
The uncertainty around employment and just you know general unser
around sort of house prices key we saver going up
and down is creating a lack of confidence around spending.
So when people are getting a bit back from the mortgage,
I think they're either saving it or putting it on
the mortgage. At this stage, I mean, hopefully you know,
rates stay low long enough it builds momentum we know
(03:26):
there's this money coming into the country from the export
sector that has to sort of flow through eventually.
Speaker 2 (03:32):
But the depreciation will that help the investing in capital?
Speaker 3 (03:38):
Yeah, it will encourage the farmers to spend some of
their money. It takes a while to flow through, and
the places that are the weakest in the in this
economy are at the moment sort of Auckland and Wellington.
Wellington's obviously been hit by the government cutbacks and things.
Speaker 2 (03:54):
But they can Wellington's going to have to take a
long hard lock. And I know Wellington's with us today,
but you really you cannot depend on government spending the
taxpayd dollar to make you a productive city.
Speaker 3 (04:05):
No, I mean, well that's I mean, it's just the
reality for them and that they kind of or your
economy is going to swing every time the government swings around.
Speaker 2 (04:12):
But I'm going to have to government proof yourselves a
wee bit more.
Speaker 3 (04:17):
Auckland, I think is very much a property story so
and construction. So Auckland, you know, thrives when the construction
sector is booming. We've had immigration come off. We've got
a lot of units and townhouses built in apartments, and
so there's an oversupply, and so the May the re
ENS data for May showed that Auckland was down again
(04:37):
in May.
Speaker 2 (04:38):
And Auckland has to take a long, hard look at
itself and you cannot depend on immigrants to buy your
overpriced houses for you to have an economy.
Speaker 3 (04:45):
Well, look, if you want to take a sort of
a positive look at what this tough period is doing,
is it's it's sort of the right kind of tough.
So it's like it's making the economy sweat in the
right way. So it's it's different to that we've had
other downturns. You know, it feels like a long downturn,
but there's points in the downturn where you go, oh,
this is terrible, but actually we're not. We're unable to
(05:08):
rely on property and immigration right now. So it does
sweat the economy. The businesses have to get used, we
have to get used to running like this, and then
when we get a little bit more immigration back, we
get a little bit of movement in property. It could
could well be a good thing, as.
Speaker 2 (05:23):
I know what you mean, rather than relying on those
highly inflationary things like a labor government or.
Speaker 3 (05:27):
Well, it's nice nice of property rises a little bit
because people it does create a wealth effect, you know,
you do want people to feel some confidence. But yeah,
so so it's it's a it's a difficult equation. And
then you know, as we mentioned the butter and things,
that's causing a lot of concern in the in the
(05:48):
public eye around inflation as well. Obviously there was a
survey to day suggesting that the government lost control of inflation.
Seemed a bit crazy, but its perception is it's perception
around dairy food, dairy dairy products and things. But you know,
with petrol prices going up, so the reserve banks got
consider inflation. Well, it's this number one thing, and that
(06:10):
there is some risk there as well. In the short
term because the economy's flat, it shouldn't be a big,
big risk, but it just means that it's very hard
for them to know whether there's suddenly going to be
a big upswing in the economy with the money coming
through and the interest rates starting to work or not.
So that's that's why I think there's a lot of
talk that they'll wait in July, but that probably some
(06:32):
more cuts will be needed, and so you probably will
get two more cuts this year, but they want to
just be sure that they're not going to get into
inflationary territory.
Speaker 2 (06:40):
So this hard work that we're doing, it's kind of
like getting up at five point thirty in the morning
to get to that gym class. And we're answering the
results yet, and we've restricted our diet and taken out
all of the fancy fun stuff and we're eating the
carbs and the protein that we need to to get
ourselves fit, and it's not fun and it's a bit boring.
(07:01):
I think it's a good analogy, and we're not seeing
the results yet.
Speaker 3 (07:04):
And so I'm optimistic that there is a tipping point
there when the you know, which.
Speaker 1 (07:12):
I have.
Speaker 3 (07:12):
Yeah, yea, we're say so when there's a point we go, oh,
hang on, I'm actually not too po yeah, and you
get there and you know, I think you know. So
it's important to remember when we talk about things slowing,
it's it's I think there's still a recovery happening. It's
just that the recovery is going at different speeds. And
it picked up a bit in the first quarter and
now it's not going to be possibly not as strong
(07:32):
in the second quarter, but it's still moving in the
right direction, and at some point the momentum should catch
and we should start to you know, that's what we
were waiting for, the recovery. That actually feels like it.
Speaker 2 (07:42):
To people exactly exactly, And yeah, I think you're right.
We'll only see that when the money coming in from
the industries that are doing well starts floating through and
when people have a bit more disposable and enounce aren't
so spooked. After five years of.
Speaker 3 (07:57):
And we have to get used to running at lower immigration.
So I mean immigration has got down to around a
net gain of twenty one thousand, where we're run at
one hundred and thirty eight thousand extra people in the
economy and so a lot of businesses and a lot
of the property market and everything was geared up for that.
And now that's a huge contraction in that sense, and
(08:19):
you know, it may come back up to around sort
of thirty thirty forty thousand net gain. And you know,
in a perfect world, we'd be having this nice moderate
level of migration with just the right number of skilled
people coming in and a bit of growth in the economy.
And you know, he's hoping one day a government can
manage that.
Speaker 2 (08:36):
He is hoping indeed. Liam, thank you as always for
your insight and do appreciate it.
Speaker 1 (08:40):
For more from carry Wood and Mornings, listen live to
news talks that'd be from nine am weekdays, or follow
the podcast on iHeartRadio
You're listening to the carry Wood and Morning's podcast from
news Talks, he'd be.
Speaker 2 (00:11):
As you will have heard on our news the GDP
grew at zero point eight percent in the first quarter
of twenty five, stronger than even the most optimistic of
economists forecast. And you wouldn't describe economists as a naturally
optimistic cherry lot, really, would you. Activity increased in the
March twenty five quarter across all three high level industry
(00:33):
groups primary industries, goods producing industries and service industries. I'm
joined as ever after our GDP announcements by New Zealand
Herald Business editor at largely and Dan good morning, hell
carry oh, the excitement, the joy, Yeah.
Speaker 3 (00:50):
Yeah, I mean, if you talk to an economists for
any length of time about this, I'm sure they're going
to find some things to tell you that aren't so chery.
But you know, look that numbers are a good, strong number.
So that's it is better than expected.
Speaker 2 (01:04):
That's the price of our butter, isn't it.
Speaker 3 (01:06):
Yeah, that's right. There's agricultural production brings with it an
increase in manufacturing and all that sort of stuff, and
so it was a strong it was a strong quarter.
But then they have downgraded the quarter before that we
thought was zero point seven percent rise. That turns out
because when they go through the numbers, you know often
(01:27):
they change, so you know this current quarter could be
downgraded or upgraded, so you need to keep that in content.
Speaker 2 (01:33):
What do you think is going to happen?
Speaker 3 (01:36):
Well, I think they were expecting a strong quarter, so
you know, it's it's it's good that it was. We
on the Herald website immediately have leapt to as we
do interest rates, and it probably raises the odds that
the Reserve Bank will leave things on hold in July.
(01:56):
So if you're hanging in there for another cart it
maybe isn't isn't such great news. But they are getting
a lot of mixed signals at the moment.
Speaker 2 (02:05):
They aren't they And that's what they're saying. And you're
seeing it in surveys too.
Speaker 3 (02:09):
Yeah, oh absolutely. I mean sometimes you'll see a survey
and say, oh, people are feeling more upbeat, and then
other times you'll see some very gloomy ones. There was
some data in the last week or so that the
economists do take very seriously, which was the performance of
Services Index and the performance of Manufacturing Index. For May,
and they both slipped back into negative recessionary territory. And
(02:31):
actually services had been there the whole way through pretty much,
but manufacturing had lifted and it had come down again,
so that worried some economists had the benz Ed guy
Dug Steel saying that he feels that the recoveries had
a brick wall. And yeah, and consumer spending has still
been quite sluggish.
Speaker 2 (02:48):
So these we can hardly blame the poor old consumers,
can you? Who are justice right? Who are going to
get the car repairs that they've been putting off and
putting off while the mortgage inter threats were so high.
They'll pay those will maybe buy a new car or
that they've been holding on, but they're not going to
be spend thrifts. With the way the world is.
Speaker 3 (03:06):
The uncertainty around employment and just you know general unser
around sort of house prices key we saver going up
and down is creating a lack of confidence around spending.
So when people are getting a bit back from the mortgage,
I think they're either saving it or putting it on
the mortgage. At this stage, I mean, hopefully you know,
rates stay low long enough it builds momentum we know
(03:26):
there's this money coming into the country from the export
sector that has to sort of flow through eventually.
Speaker 2 (03:32):
But the depreciation will that help the investing in capital?
Speaker 3 (03:38):
Yeah, it will encourage the farmers to spend some of
their money. It takes a while to flow through, and
the places that are the weakest in the in this
economy are at the moment sort of Auckland and Wellington.
Wellington's obviously been hit by the government cutbacks and things.
Speaker 2 (03:54):
But they can Wellington's going to have to take a
long hard lock. And I know Wellington's with us today,
but you really you cannot depend on government spending the
taxpayd dollar to make you a productive city.
Speaker 3 (04:05):
No, I mean, well that's I mean, it's just the
reality for them and that they kind of or your
economy is going to swing every time the government swings around.
Speaker 2 (04:12):
But I'm going to have to government proof yourselves a
wee bit more.
Speaker 3 (04:17):
Auckland, I think is very much a property story so
and construction. So Auckland, you know, thrives when the construction
sector is booming. We've had immigration come off. We've got
a lot of units and townhouses built in apartments, and
so there's an oversupply, and so the May the re
ENS data for May showed that Auckland was down again
(04:37):
in May.
Speaker 2 (04:38):
And Auckland has to take a long, hard look at
itself and you cannot depend on immigrants to buy your
overpriced houses for you to have an economy.
Speaker 3 (04:45):
Well, look, if you want to take a sort of
a positive look at what this tough period is doing,
is it's it's sort of the right kind of tough.
So it's like it's making the economy sweat in the
right way. So it's it's different to that we've had
other downturns. You know, it feels like a long downturn,
but there's points in the downturn where you go, oh,
this is terrible, but actually we're not. We're unable to
(05:08):
rely on property and immigration right now. So it does
sweat the economy. The businesses have to get used, we
have to get used to running like this, and then
when we get a little bit more immigration back, we
get a little bit of movement in property. It could
could well be a good thing, as.
Speaker 2 (05:23):
I know what you mean, rather than relying on those
highly inflationary things like a labor government or.
Speaker 3 (05:27):
Well, it's nice nice of property rises a little bit
because people it does create a wealth effect, you know,
you do want people to feel some confidence. But yeah,
so so it's it's a it's a difficult equation. And
then you know, as we mentioned the butter and things,
that's causing a lot of concern in the in the
(05:48):
public eye around inflation as well. Obviously there was a
survey to day suggesting that the government lost control of inflation.
Seemed a bit crazy, but its perception is it's perception
around dairy food, dairy dairy products and things. But you know,
with petrol prices going up, so the reserve banks got
consider inflation. Well, it's this number one thing, and that
(06:10):
there is some risk there as well. In the short
term because the economy's flat, it shouldn't be a big,
big risk, but it just means that it's very hard
for them to know whether there's suddenly going to be
a big upswing in the economy with the money coming
through and the interest rates starting to work or not.
So that's that's why I think there's a lot of
talk that they'll wait in July, but that probably some
(06:32):
more cuts will be needed, and so you probably will
get two more cuts this year, but they want to
just be sure that they're not going to get into
inflationary territory.
Speaker 2 (06:40):
So this hard work that we're doing, it's kind of
like getting up at five point thirty in the morning
to get to that gym class. And we're answering the
results yet, and we've restricted our diet and taken out
all of the fancy fun stuff and we're eating the
carbs and the protein that we need to to get
ourselves fit, and it's not fun and it's a bit boring.
(07:01):
I think it's a good analogy, and we're not seeing
the results yet.
Speaker 3 (07:04):
And so I'm optimistic that there is a tipping point
there when the you know, which.
Speaker 1 (07:12):
I have.
Speaker 3 (07:12):
Yeah, yea, we're say so when there's a point we go, oh,
hang on, I'm actually not too po yeah, and you
get there and you know, I think you know. So
it's important to remember when we talk about things slowing,
it's it's I think there's still a recovery happening. It's
just that the recovery is going at different speeds. And
it picked up a bit in the first quarter and
now it's not going to be possibly not as strong
(07:32):
in the second quarter, but it's still moving in the
right direction, and at some point the momentum should catch
and we should start to you know, that's what we
were waiting for, the recovery. That actually feels like it.
Speaker 2 (07:42):
To people exactly exactly, And yeah, I think you're right.
We'll only see that when the money coming in from
the industries that are doing well starts floating through and
when people have a bit more disposable and enounce aren't
so spooked. After five years of.
Speaker 3 (07:57):
And we have to get used to running at lower immigration.
So I mean immigration has got down to around a
net gain of twenty one thousand, where we're run at
one hundred and thirty eight thousand extra people in the
economy and so a lot of businesses and a lot
of the property market and everything was geared up for that.
And now that's a huge contraction in that sense, and
(08:19):
you know, it may come back up to around sort
of thirty thirty forty thousand net gain. And you know,
in a perfect world, we'd be having this nice moderate
level of migration with just the right number of skilled
people coming in and a bit of growth in the economy.
And you know, he's hoping one day a government can
manage that.
Speaker 2 (08:36):
He is hoping indeed. Liam, thank you as always for
your insight and do appreciate it.
Speaker 1 (08:40):
For more from carry Wood and Mornings, listen live to
news talks that'd be from nine am weekdays, or follow
the podcast on iHeartRadio
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