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March 19, 2025 5 mins

New Zealand is believed to be crawling to economic recovery. 

Figures —due out from Stats NZ this morning— are expected to show the economy grew between 0.3 and 0.5% in the three months to December. 

That would lift New Zealand out of technical recession, but further growth will be slow. 

ASB chief economist Nick Tuffley told Francesca Rudkin an uplift in agriculture in quarter four will have helped. 

He says the sector —particularly dairy— had a strong lift into Christmas. 

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Episode Transcript

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Speaker 1 (00:00):
Right. It's hoped we'll get confirmation today that New Zealand
is crawling out of its recession. The GDP number for
Q four last year is out this morning. Most economists
are picking a rise between point three and point five percent,
but that comes off the back of a one point
one percent and one percent drop in Q three in
Q two last year. ASB chief economist Nick Toughly is

(00:23):
with us now, Good morning, Nick, Thanks for your time.

Speaker 2 (00:26):
Good morning.

Speaker 1 (00:26):
What numbers are you picking?

Speaker 2 (00:28):
We are picking one point three percent lift and that's
the same as the Reserve Bank, So I think you
had a good analogy there. It is crawling, particularly when
you put in that context of just how much things
slowed down during the little parts of last year.

Speaker 1 (00:41):
So the fact that we're going to be out of
a technical recession, that's good news. But this growth is
still pretty anemic, right.

Speaker 2 (00:48):
It is going to be a greater recovery. I think
what we need to remember is that interest rates have
been falling for a little bit, but it hasn't been
until probably that fourth quarter of last year where we
started to see that average mortgage rate that people were
paying start to decline and start to actually impact on
people's cash flows, so we do see that we'll be

(01:09):
seeing those glimmers of light and consumer spending coming through,
which is a really really good start signaling recovery. But
we are really being saved over the quarter, assuming that
we do have a positive number by things like agriculture,
where we had really great weather in the dairy season
in particular, had a really strong lift into Christmas.

Speaker 1 (01:28):
Yes, so as you're taking a look at the sectors
which are on the improve, which ones do you think
we'll have given it a boost and which ones would
you sort of hope to see better performance from going forward.

Speaker 2 (01:41):
Where we've seen some good time sort of coming through
it is a dairy in the meat sector, so strong
sort of meat production as well, and despite what's happening
in the US for the time being anyway, they haven't
given up even handburgers, which has really helped a lot,
So that's been good that retail sector through spending, also
being helped by tourism. So expect those aspects to come

(02:04):
through and help us out. Where I think there still
looking quite soggy is in construction, so we're still coming
out of the tail end of the impacts of the
housing market and more general properties slow down, so that
sector really struggling still in the short term.

Speaker 1 (02:19):
You mentioned the glimmers. We all like a glimmer. How
long do you think it will take the country to
bounce back from the major drops last year. Are we
going to see a boom or much more of a
slow burn?

Speaker 2 (02:30):
It's I think much more realistically look at this as
being a slow burn. It's going to be I think
a bit of a challenge to suddenly see the economy
rebound and recover two percent and the conditions that we're facing.
But look where we've got some good tail winds. It
is those low interest rates gradually working their way through
this year, the good payouts that the farmers are getting,
the tourism sector picking up or working their way through.

(02:53):
And it's not obviously just about a dairy story. That
meets story as well starting to shine through. So look
at it as gradual recovery rather than sharp rebound. We're
going back to more normal interest rates settings rather than
dropping to some really low level where we all can't
afford not to borrow.

Speaker 1 (03:09):
Is z point three percent rise enough of the government
to convince us things are turning around.

Speaker 2 (03:15):
Look, it's a really good sign if we get a
positive number that we are starting to crawl our way
out of what's been a really challenging time. But look,
the challenges is that with growth being relatively modest, we're
not going to be suddenly getting back to low levels
of unemployment that quickly as well. And look, the general
challenges that the government faces are still around getting productivity

(03:39):
back up after a number of years of it been very,
very weak, and really focusing on what it can do
to enable growth, bring back the confidence, get people making
decisions that help the economy spack up.

Speaker 1 (03:55):
I was going to ask you what the risks are
for the economy to continue to grow.

Speaker 2 (04:01):
Where we are most vulnerable and most countries are at
the moment is what's happening globally at the moment, mainly
around Donald Trump. And there's a few areas where that's
impacting just simply all the going backward and forth on
whether there's a tariff or not. The fact that he
is also hitting a lot of his allies with tariffs

(04:23):
is creating a lot of uncertainty, and certainty is not
great for making clear decisions. So there is that risk
to global growth of it being slowed by both the uncertainty,
and that's even before you get into the drag that
we could have if we get some quite widespread tariffs.
And we are also going to have to be mindful
when we roll around it to April and we get
our report card on our trade practices, whether or not

(04:45):
we get directly impacted by tariffs as well. So biggest
risks seem to be coming from globally, whereas domestically, with
interest rates coming down, it's really a matter of time
until they start to work through and improve the economies locally.

Speaker 1 (05:00):
For more from Early Edition with Ryan Bridge, listen live
to News Talks at B from five a m. Weekdays,
or follow the podcast on iHeartRadio
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