Jarrod Kerr: Kiwibank economist on New Zealand's GDP dropping 0.2 percent

One expert says today's GDP figures paint a bleak picture of the economy - but there's light at the end of the tunnel.

Stats NZ revealed this morning a 0.2 percent contraction for the three months to June, following 0.1 percent growth in the March quarter.

Kiwibank economist Jarrod Kerr says it's likely the economy won't start growing again until late 2025.

"The Reserve Bank's put a stake in the ground - they started cutting in August - and I think that'll mark the turning point."

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Episode Transcript

Speaker 1 (00:00):
Good afternoon. To the surprise of absolutely no one, the
economy has shrunk again. GDP was down zero point two
percent in the second quarter of the year. Retail trade, accommodation, agriculture, forestry, fishery, fishing,
and wholesale trade industries all foul. Jared ker is Kiwibank's
chief economist, and with us Now, hey, Jared, Hi, Matte,
it's good to talk to you again. You reckon this

(00:20):
basically is getting us very close to, if not already
at two years of recession.

Speaker 2 (00:24):
Yeah, yeah, it is. We think we'll see another contraction
in the current quarter, so that'll bring it on two years.

Speaker 1 (00:32):
I mean, the thing that's the number that hurts the
most is the per capita GDP fall of two point
seven percent.

Speaker 3 (00:38):
How significant is that?

Speaker 2 (00:40):
It is very significant. We have seen quite a spike
in migration over the twenty twenty three but when we
chop it up and look on a per capita basis,
we saw a four point five in the quarter, and
we're down four point six from twenty twenty two levels.
That's significant, and that's where what we saw during the GFC.

Speaker 3 (01:01):
When does this turn around, When do we start seeing
per capita growth again.

Speaker 2 (01:07):
Late next year, I think. But I think the Reserve
banks put a stake in the ground by sort of
cutting in August, and I think that'll mark the turning point.
Discussions with businesses in households since then has seen, you know,
people lift their heads and look to next year with
a bit more optimism.

Speaker 3 (01:28):
What do you reckon the Reserve Bank does next month?

Speaker 2 (01:31):
I think they cut twenty five. I think they should
cut fifty. We saw the SED come out this morning
with a fifty for basis point rate cut. They're clearly
willing to cut a little faster than we are, and
I think we need to do the same. You know,
we can't forget that interstrate cuts today take up to
eighteen months to feed through, so you're setting policy for

(01:53):
the start of twenty twenty six. I think they need
to get cracking good stuff.

Speaker 3 (01:58):
Jered really appreciated Jared Kirkiey Banks to Economist.

Speaker 4 (02:01):
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