Richard Prebble: Former Associate Finance Minister on the GDP, path of the economy

A prediction that 2026 will be a very good year for the economy.  

GDP grew 1.1% in the September quarter.  

Former Associate Finance Minister Richard Prebble even suspects we could see a turnaround in unemployment, which has ticked up since 2022.  

He says Stats NZ data is always backwards looking.  

Prebble told Heather du Plessis-Allan job ads are on the up and Seek numbers up 7%. 

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Episode Transcript

Speaker 1 (00:00):
Do we have some good economic news surround out the year.
GDP grew one point one percent in Q three, which
is close to three times what the Reserve Bank was packing.
Growth was broad based as well, with fourteen of sixteen
industries up, including manufacturing and construction. Richard Preble is a
former Associate Finance Minister and with.

Speaker 2 (00:16):
US morning, Richard, good morning.

Speaker 1 (00:18):
Are you taking heart from this going into next year?

Speaker 2 (00:22):
I most certainly am. Actually, the both US quarters turn
out to be good news. The negative quarter of one
percent out to be just a dip, but that persuaded
the Reserve Bank to stop smashing the economy with high
interest rates. Don't know what else would have. But September

(00:42):
is basically, how can I put it, ancient history? What
we want to know is what's happening now. And there
are other indicators that indicate that we've had six months
of growth and we're ending the year strongly.

Speaker 1 (00:58):
So I mean, at the moment, it sounds like we
might be in a quarter that's about zero point three
zero point four percent growth. Is that good enough?

Speaker 2 (01:05):
No? I think we're doing better than that. What I
think we've got a very good world leading indicator of
how the economy is going. That's Massy University's TDP Live
website that uses artificial intelligence measures things like fate movements
off the wharf and other contemporary data to give a

(01:30):
daily figure of how the economy is growing. And right
now it says the economy is growing nearly one percent
and has been for the last six months. While it's
not spectacular, that's still solid growth.

Speaker 1 (01:47):
Yeah, that's fantastic. Okay. So the thing about it is, though,
I mean, we're getting are we at risk of perhaps
getting ahead of our skis on these numbers because next
year we still have unemployment that is high and ticking up,
We've still got the election that we need to face,
which cool spending, We've We've still got a whole bunch
of stuff that isn't doing too well.

Speaker 2 (02:04):
A yeah, but if we employments was the last indicator,
and the Department of Statistics, you know, it's very historic,
so you have to go back months to look at
their at their figures. It's better to look at job
advertising and there's a major site to seek and it's

(02:25):
up seven percent. That would indicate that employments well soft
is actually heading in the is now heading in the
right direction.

Speaker 1 (02:35):
Now Richard, I want to get your take on this
debate about Nikola Willis needing to trim more fat out
of the books. Are you in the camp of keep
spending the money to avoid human misery or cuts to
save the books.

Speaker 2 (02:47):
I'm in the I'm in the cut. The government's got
heaps of waste and very poor spending and could have
easily taken out another couple of billion. But this is
what I would say in Nichola Willis's defense. The government
again is a lag so we have to earn the

(03:10):
money and then we pay the taxes. So if we've
had a year of not good growth, then the government's
own tax revenues haven't been growing. But if the economy
keeps going it the way it's going, then the government's
books will improve significantly. And I'll say this about treasury productions.

(03:34):
Treasury always gets it wrong, so it underestimates how bad
things are going to be, and then it underestimates how
good things are going to be. I think there's every
indication that twenty twenty six will be a very good year.
And interestingly, a net twenty one percent of us according
to the Morgan Pole, also think that. And I'm on

(04:00):
with the messas twenty twenty six should be a good year.

Speaker 1 (04:04):
Good I'm so pleased to hear it. Richard, thank you
very much. Look after yourself, Richard Prebble, former Associate Finance Minister.
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