Nicola Willis: Finance Minister on GDP results, unemployment rates, business confidence

New Zealand is officially out of the worst recession since 1991.

New Zealand’s gross domestic product (GDP) rose 0.7% in the December 2024 quarter, following a 1.1% decrease in the September 2024 quarter, according to figures released by Stats NZ today.

Finance Minister Nicola Willis talks to Tim Beveridge about the turning point.

LISTEN ABOVE.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
The New Zealand economy has officially turned a corner. GDP
rows zero point seven percent in the December quarter, finally
putting an end to the recession. The rebound was stronger
than an economists had predicted, driven by tourism and primary industries.
Construction well that took a bit of a hit is
down more than three percent, and Nikola Willis is the
Finance Minister. Good afternoon, good afternoon. You'll be loving this news,

(00:24):
won't you, I am.

Speaker 2 (00:26):
It tells us that we are turning the corner, which
is what New Zealanders need after a very tough time
with high inflation, high interest rates, and growth bouncing along
the bottom. The numbers today are better than was forecast
and tell us that recovery is underway. We need that
to be sustained because the New Zealanders will start feeling
it in their household budgets and in their communities. But

(00:47):
this tells us we're on our way.

Speaker 1 (00:49):
So compared to December twenty twenty three, the economy is
still one point one percent smaller. We've still got a
long journey ahead of us, don't we.

Speaker 2 (00:57):
We do. There's no getting away from the fact that
New Zealand is hammered following COVID. The huge amount of
spending that was done during that time resulted in a
very high inflation spike, rapidly rising interest rates, and that
put a real clamp on our economy and it's taking
time to dig ourselves out of it. But we are

(01:17):
on our way now and the government's focus is how
we accelerate that growth because we know that when we
do that will lead to higher incomes, that will lead
to a more affordable cost of living for New Zealanders,
and that's our focus. We're going for growth.

Speaker 1 (01:30):
So because we saw the dip and consumer confidence in
the later survey yesterday, how long does it take for
these figures to actually turn into us feeling good about
where we're going.

Speaker 2 (01:39):
We do need to see a sustained period of growth
because unfortunately, the last thing to recover is always employment,
and so forecasters are expecting that unemployment will continue to
rise over the next few months, and of course that
has a real impact on people's confidence. What we do
know is that unemployment is set to stay below where

(02:01):
it's been historically, below the historic average, so it's not
going to be as bad as it has been during
previous downturns. But look, my enthusiasm is to see us
get through this as quickly as possible. What we are
seeing is that many businesses are more confident about the
future now. They're seeing those high dairy prices, those more
tourism numbers flowing through into money being spent in their communities.

(02:22):
They're seeing that people who are refixing on lower mortgages
more able to spend at their local shops, and so
that recovery is underway and New Zealanders will start feeling
it as businesses are better able to pay high wages
when they're selling more when they're more profitable.

Speaker 1 (02:38):
Of course, these numbers are also better than the Reserve
Bank had anticipated. Do you think that might mean that
we can be optimistic about further drops and interest rates.

Speaker 2 (02:47):
Well, this is obviously a better result than the Reserve
Bank was expecting. But they'll be weighing up a number
of factors. They'll be looking at the international context, they'll
be looking at a lot of different data as they
make their cash rate decisions. We know that they've been
forecasting additional interest rate drops this year, and I know
many Kiwis will welcome that.

Speaker 1 (03:09):
When we look at the whole global outlook. There is
a fair bit of uncertainty about that. How realistic do
we need to be about optimism?

Speaker 2 (03:19):
Yeah, look, there is uncertainty about that, and that impacts
New Zealand in a couple of ways. It means that
the costs of paying the interest bill on our debt
are going to be high, which affects our books. It
means that some businesses might look out the global context
and not feel as confident about investing for the future.
But I just remind everyone that I go and meet,

(03:39):
Actually New Zealand is very well positioned in an unstable world. Actually,
we're selling products that people want. We have lots of
strong trading relationships, and we've got one of the highest
dairy prices we've ever had two years in a row.
And there are good things happening here. And I tell you,
the international investors who we were meeting with last week said, look,
New Zealand, it's a safe haven. It's a stable place.

(04:03):
You guys have got great prospects ahead of you, and
I think we need to stay fixed on that and
not get too trapped in the deming gloom of what
some other countries are experiencing. Around the world.

Speaker 1 (04:13):
Nichola wellis, thank you, Finance Minister. For more from Heather
Duplessy Allen Drive, listen live to news talks. It'd be
from four pm weekdays, or follow the podcast on iHeartRadio.