Liam Dann: NZ Herald Business Editor on the GDP growing by 0.2%

New Zealand's economy wasn't doing as well as we thought, even before war broke out in the Middle East. 

Latest Stats NZ data shows GDP rose just 0.2% in the December quarter – well under the Reserve Bank forecast of 0.5%. 

Inflation hit 3.1% in the quarter, above the central Bank's forecast of 2.7%. 

The Herald's Liam Dann told John MacDonald if the Iran conflict continues, we could be at risk of "stagflation" – a combination of high inflation and low growth seen in the 1970s. 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from News Talk ZB.

Speaker 2 (00:12):
The latest GDP figures are out in the show that
the New Zealand economy grew zero point two percent in
the last quarter. It's at the lower end of expectations.
The economists were proticting between zero point two and zero
point four. The thing is, what does this all mean
with everything going on in the world at the moment,
with Iran and all the consequences of that. Well, to

(00:35):
pick through it is New Zealand Herald Business editor at
large Liam dan get the limb. Hey, John, I said
earlier that with the GDP numbers today and the fact
that everything's going on, you know, everything else is going
on in the world since those numbers were relevant. It's
a bit like telling someone who's visiting from out of
town they should have been here last week because the

(00:56):
weather was brilliant. Is that what this is like?

Speaker 3 (00:59):
Yeah, although I guess what we've seen today is that
we're telling them that lucky you were lucky you weren't
here last week because the weather wasn't so good. I mean,
it's a start. I've framed it as saying, well, okay, look,
you know, everything has changed since the conflict started in Iran,
but what was our starting point going into that? How
strong was the economy because that does matter in terms

(01:21):
of the resilience and how much sort of pain it
can take without sort of really stalling the recovery. So
on that basis, I think we'd hoped that that fourth
quarter would be a bit stronger than it was, to
be honest, zero point two. You know, the Reserve Bank
had zero point five. The economists only got as optimistic
as some of them thinking it might be zero point four.

(01:43):
But you know, and obviously a really strong performance from
the primary sect. Some of the services around tourism have
been pretty good, but construction still standing out as a
real hole in the economy with a big slump in activity. Yeah,
so so not fantastic. Really, I'd have to say.

Speaker 2 (02:04):
Okay, that zero point five the reserve banks expectation. I
mean yet again, is that the reserve banks slightly out
of touch.

Speaker 3 (02:11):
Well, you know, they they can't update their forecasts as
regularly as the bank economists. Perhaps you know that that
might be a little bit of it, but yeah, I mean,
just just a little optimistic, I suppose. Yeah, I mean
it's a tough one, but I think, yeah, that that

(02:31):
that would have played into the equations for monetary policy.
But I guess at the moment, all bets are off
on monetary policy until we see how long this conflict
goes on in the Middle East and how you know,
what that really does to inflation. But it is worrying
that we've still you know, that that growth is still

(02:53):
so low and even ahead, you know, before the war started,
we've seen you know, food prices going up four point
five percent and some of them, you know, you start
to get into that territory that does that combination of
high inflation and low growth dagflation they call it, which
was experienced by New Zealand in the nineteen seventies, and
we've talked about before. But it's not a great place

(03:14):
to be. It's sort of the worst of both worlds.

Speaker 2 (03:16):
You almost sound surprised by this number.

Speaker 3 (03:19):
Well, I mean, I guess I got pulled into following
the green shoots and watching the growth very closely, and
you know, I'm a little surprised because you know, in
years gone by, the strength of our primary sector was
a you know, felt like it was a bigger driver,
and so it's quite remarkable that growth would be this

(03:43):
low with the exports booming, you know, and you know,
interest rates had really come down, and you know, when
you look back to well you look at what we're
worrying about now in terms of you know, petrol supply
and all that sort of stuff, you just think, well,
what was so bad in the fourth quarter of last year.
Really we were starting to see some progress, tourism coming back,

(04:05):
but there obviously wasn't a lot of confidence there, and
you know, it does does raise some concerns about what
where confidence will be now, because if you're a business
starting to think about investment decisions and things, you're probably
wondering if you might hold off for to see whether
we get through how we get through this next period
with the oil.

Speaker 2 (04:25):
Shop okay, just for move on. So not not much
for the government to be able to crow about.

Speaker 3 (04:31):
I wouldn't have thought, so, I mean, you know, we'll.

Speaker 2 (04:34):
We'll give it a good go, though, won't they.

Speaker 3 (04:35):
Well that you could say it's growth. So you know,
you've had I think three consecutive quarters of growth now
for the economy. But you know, like so even the
third quarter where we had that one point one percent bounce,
you know that that's been revised back to zero point nine.
So the growth just hasn't been as strong as some

(04:57):
of the indicators might have suggested it would be. So yeah,
a little surprised and not a great read for the government,
which is obviously they've got a lot of other problems
to deal with right now.

Speaker 2 (05:09):
All right, nice to talk to you. Thanks. Then that's
Leam Dan, New Zealand Herald Business Editor at Large. So
that GDP number, you know, the economy grows their own
point two percent.

Speaker 1 (05:19):
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