September 19, 2024 • 4 mins
The Finance Minister is seeing the light at the end of the tunnel in the wake of the latest economic figures.
Latest Stats NZ figures reveal the GDP contracted by 0.2% in the three months to June
In the March quarter, 0.1% growth was recorded.
Nicola Willis told Mike Hosking we're still very much in clean-up mode, but the important indicators look good.
She says inflation is forecast to come under control and interest rates continue to fall.
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Episode Transcript
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Speaker 1 (00:00):
So GDP for Q two was minus zero point two,
so glass half fall not as bad as consensus, and
in a week in fact, we've seen simple surveys that
indicate from business to manufacturing, the services to consumers, we
might might just be seeing a little bit of light
at the end of the old tunnel. Finance Minister Nicola
willis with us for this Friday.
Speaker 2 (00:15):
Good morning, Good morning mate.
Speaker 1 (00:17):
So it could have been worse.
Speaker 2 (00:19):
Yes, it could have been worse. But ultimately I think
we think back to the dooing Porter. We know that
that was before the Reserve Band had reduced interest rates.
Things felt pretty tough in the economy. So I don't
think we're surprised by this number, and it does reflect
the result of a long period of high interest rates
which have squeezed the economy, and of course those were
(00:41):
a response to an extended period of high inflation. Go
I'd characterized where we are right now as a country,
as we are still in clean up mode, we're laying
the foundation's growth rise ahead.
Speaker 1 (00:52):
Could it be possible that Q three some suggesting Q
three would not be as bad as Q two. Therefore,
of Q two wasn't as bad as we thought it's possible.
Q three is not even backwards, therefore we're not actually
in recession.
Speaker 2 (01:05):
That is possible. I'm conscious that the interest rate reduction
happens in August, which is late in the September quarter,
so we'll see. What I take a lot of heart
from is the forward indicators. So what I care about
is inflation coming out of control. Yes, forecasts to be
back this quarter, our interest rates coming down. Yes, We've
(01:27):
had our first reduction earlier than some have been forecasting,
and the forecast to keep falling. And is that seeing
a change in business confidence? Yes, the surveys are showing
that businesses think the year ahead is better. And that's
good because when business is a confident and interest rates
are lower and inflation is lower, that's when you get investments.
(01:47):
That's when firms start hiring people, they start innovating, buying
your machinery. That's where growth comes from. And that's what
we are very focused on. What can we as a
government do to make it easier for people to export,
to hire people to innovate, get the red tape out
of the way, get on with growing. Yeah.
Speaker 1 (02:04):
Speaking of which, the current account though was shocking, it
didn't change as a percentage of GDP, but it's a
shocking number. Are you doing anything specific or is that
beyond your control in the buying and selling of stuff
to the world.
Speaker 2 (02:16):
That is in our agenda and the specific thing that
we can do, of course is drive better trade relationships
around the world. Todd McClay has been working very hard
on that and we will be in a position to
have new trading relationships as a government, we will have
more to say about that. It's important as exporters have
more markets to send their goods to. We also think
(02:36):
that it's important that you can actually get big developments
into New Zealand. The fast track Consenting ragiene I think
has been underestimated as an economic reform because ultimately, if
you want gross in an economy, people have to be
able to say, I'm going to do that big housing development,
I'm going to do that big mining development, I'm going
to do that big manufacturing facility, and our fast track
(02:57):
mechanism will unlock that investment, which rule helps to productivity
and eventually flows through to your current account.
Speaker 1 (03:03):
Okay, two part question. Carmel was busy on this in
question time yesterday. So the job seeking numbers forecast now
at two fourteen thousand to peak and jen of twenty five.
Two part question is that the end of it? And
two how would we know given most of the forecasts
are wrong?
Speaker 2 (03:18):
Well, the fourth bus do tell us that unemployment is
het to keep rising. There's always a lag effect that
comes off the back of these declining these decline and
growth figures. But here's a number that I'm really focused on,
which is how many people are exiting the job seeker
benefit and going back into work. And really positively that
(03:40):
number is higher this year than it was last year
on a month or a month basis. Why because actually,
when you say to people there is a sanctions regime.
If you're on the benefit, it's not meant to be
forever or a lifestyle. We want to help you to
get back into jobs. You can keep people flowing through.
Now that's not to say it's not a challenging environments,
(04:01):
it's not sound. Employment isn't a number that's been going up,
but we are confident we can keep moving Kiwis into jobs.
Speaker 1 (04:07):
Good, have a good weekend, Appreciate it. Nichola Willis, the
Finance Minister. For more from the Mic Asking Breakfast Listen
live to news talks. It'd be from six am weekdays,
or follow the podcast on iHeartRadio
So GDP for Q two was minus zero point two,
so glass half fall not as bad as consensus, and
in a week in fact, we've seen simple surveys that
indicate from business to manufacturing, the services to consumers, we
might might just be seeing a little bit of light
at the end of the old tunnel. Finance Minister Nicola
willis with us for this Friday.
Speaker 2 (00:15):
Good morning, Good morning mate.
Speaker 1 (00:17):
So it could have been worse.
Speaker 2 (00:19):
Yes, it could have been worse. But ultimately I think
we think back to the dooing Porter. We know that
that was before the Reserve Band had reduced interest rates.
Things felt pretty tough in the economy. So I don't
think we're surprised by this number, and it does reflect
the result of a long period of high interest rates
which have squeezed the economy, and of course those were
(00:41):
a response to an extended period of high inflation. Go
I'd characterized where we are right now as a country,
as we are still in clean up mode, we're laying
the foundation's growth rise ahead.
Speaker 1 (00:52):
Could it be possible that Q three some suggesting Q
three would not be as bad as Q two. Therefore,
of Q two wasn't as bad as we thought it's possible.
Q three is not even backwards, therefore we're not actually
in recession.
Speaker 2 (01:05):
That is possible. I'm conscious that the interest rate reduction
happens in August, which is late in the September quarter,
so we'll see. What I take a lot of heart
from is the forward indicators. So what I care about
is inflation coming out of control. Yes, forecasts to be
back this quarter, our interest rates coming down. Yes, We've
(01:27):
had our first reduction earlier than some have been forecasting,
and the forecast to keep falling. And is that seeing
a change in business confidence? Yes, the surveys are showing
that businesses think the year ahead is better. And that's
good because when business is a confident and interest rates
are lower and inflation is lower, that's when you get investments.
(01:47):
That's when firms start hiring people, they start innovating, buying
your machinery. That's where growth comes from. And that's what
we are very focused on. What can we as a
government do to make it easier for people to export,
to hire people to innovate, get the red tape out
of the way, get on with growing. Yeah.
Speaker 1 (02:04):
Speaking of which, the current account though was shocking, it
didn't change as a percentage of GDP, but it's a
shocking number. Are you doing anything specific or is that
beyond your control in the buying and selling of stuff
to the world.
Speaker 2 (02:16):
That is in our agenda and the specific thing that
we can do, of course is drive better trade relationships
around the world. Todd McClay has been working very hard
on that and we will be in a position to
have new trading relationships as a government, we will have
more to say about that. It's important as exporters have
more markets to send their goods to. We also think
(02:36):
that it's important that you can actually get big developments
into New Zealand. The fast track Consenting ragiene I think
has been underestimated as an economic reform because ultimately, if
you want gross in an economy, people have to be
able to say, I'm going to do that big housing development,
I'm going to do that big mining development, I'm going
to do that big manufacturing facility, and our fast track
(02:57):
mechanism will unlock that investment, which rule helps to productivity
and eventually flows through to your current account.
Speaker 1 (03:03):
Okay, two part question. Carmel was busy on this in
question time yesterday. So the job seeking numbers forecast now
at two fourteen thousand to peak and jen of twenty five.
Two part question is that the end of it? And
two how would we know given most of the forecasts
are wrong?
Speaker 2 (03:18):
Well, the fourth bus do tell us that unemployment is
het to keep rising. There's always a lag effect that
comes off the back of these declining these decline and
growth figures. But here's a number that I'm really focused on,
which is how many people are exiting the job seeker
benefit and going back into work. And really positively that
(03:40):
number is higher this year than it was last year
on a month or a month basis. Why because actually,
when you say to people there is a sanctions regime.
If you're on the benefit, it's not meant to be
forever or a lifestyle. We want to help you to
get back into jobs. You can keep people flowing through.
Now that's not to say it's not a challenging environments,
(04:01):
it's not sound. Employment isn't a number that's been going up,
but we are confident we can keep moving Kiwis into jobs.
Speaker 1 (04:07):
Good, have a good weekend, Appreciate it. Nichola Willis, the
Finance Minister. For more from the Mic Asking Breakfast Listen
live to news talks. It'd be from six am weekdays,
or follow the podcast on iHeartRadio
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