Liam Dann: NZ Herald Business Editor on the GDP falling 0.2% in the three months to June

New Zealand's economy has barely escaped another technical recession. 

New Stats NZ figures show our Gross Domestic Product contracted 0.2% in the three months to June. 

Its revised figures downgrade the March quarter to show the economy grew just 0.1%, not the 0.2% initially estimated. 

Herald Business Editor at Large Liam Dann told John McDonald that minimal growth kept us out of another technical recession but doesn't change reality. 

He says with a lot of migration gains and population growth, on a per capita basis we're still in a recession. 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerry Wood of Morning's podcast from
News Talk sed B.

Speaker 2 (00:11):
As you've heard our news the economy has narrowly escaped recession.
Just released figures from stat scene Zed show GDP contracted
zero point two percent in the three months to June.
Economists had predicted. You're not there, like the contraction of
between zero point one and zero point five percent. Today's figures,
I make it the fifth quarterly contraction out of the
past seven quarters. Well, let's get to the number. This

(00:34):
with the New Zealand Herald Business editor at Large, Liam Dan,
could I limb, hey.

Speaker 3 (00:38):
John, what does this mean?

Speaker 1 (00:39):
Ah?

Speaker 3 (00:39):
Yeah, it's making sense of it because it's still not
easy to pick really. I mean, so on one level,
it is not quite as bad as say, the Reserve
Bank was expecting, which is sort of good news, although
we're all hoping that they'll keep cutting interest rates regardless.
But GDP's a funny thing. It takes a long time
to collect it accurately, and there's often a lot of revision.

(01:00):
So they revised back the March quarter from zero point
two percent growth to zer zero point one percent, So
we only just missed if that had gone back to zero,
we'd be in what they call a technical recession again already.

Speaker 1 (01:16):
But then, of.

Speaker 3 (01:16):
Course, and some listeners will be already thinking this. You know,
we know that we've been getting a lot of migration
gain population growth, so on a per capita basis, we're
absolutely still very much in recession. And so I think
it's been about two years of per capita GDP contraction.

(01:40):
So yeah, that's really the way to look at it
as effectively one long recessionary period. There's a little bit
of bouncing around as people spend more. Like you know,
there was a little bit more household spending in this
last quarter. Possibly it's actually pre tax cut and pre
rate cut, but some of the prices of vegetables came

(02:01):
off and things like that, and so noted that there
was a little bit more household spending, but that core
engine of the economy, a lot of those sectors like
construction and things, really in tough straits at the moment.

Speaker 2 (02:14):
I see that Labour's already got a statement out saying
no growth under national just cuts. So Labour's got the
serious face on and I think we can anticipate the
government will have the steely but let's get through it.
Face on which one do you think is more appropriate
based on these numbers?

Speaker 3 (02:27):
Well, I mean, it gets very political, doesn't it. We're
still You'd have to be a pretty die hard labor
supporter not to think that we're still in the backwash
of what we've been through prior to national coming in.
I mean, it's clearly the case that you know, their
interest rates have gone up to deal with all that
inflation that was causing so much pain, and that's causing

(02:50):
its own pain on the recessionary end of the cycle.
There's probably a little bit of debate about how hard
and fast both the Reserve Bank and the government with
some of the spending cuts needed to be done. But
then you know, there's there's concerns about New Zealand's debt
levels and things, and it does tend to come down
to a sort of how you take your pain, you know,

(03:13):
do you go for the sort of rip the band
aid off or pull it off more slowly. I think
with the way this government is, you know, tackled to
spending cuts and you know you're seeing downturn and Wellington
that kind of thing, it's probably going a little bit
harder and we're feeling that right now, the hope would

(03:34):
be that that means that we're going to see interest
rates coming down fairly steadily over the next year, and
that that might create some fair winds for a bit
of a recovery next year.

Speaker 2 (03:44):
Because I saw rates in the US. I saw overnight
they're starting to come down for the first time in
a long time. You don't think this result will change
the trajectory we've been on.

Speaker 3 (03:52):
I don't think so. I mean that they've got to
look stand back on the reserve bank and look at
the aggregate. So this quarter wasn't quite as bad as
they had thought it would be, but then the previous
quarter was probably worse, and I don't see anything coming
along to the next quarter look particularly good. You know,
it'll be interesting to see how much the tax cut
and the first rate cut boy people, But you know,

(04:15):
you just get the sense that there's some really deep
recessionary sort of feeling out there around construction all that
sort of stuff. Were seeing immigration come off really fast.
So even though we've had this record numbers of migrants
coming into the country, we've got Westpac predicting that we'll
be at net zero migration by next year because we've

(04:36):
got so many kiwis leaving and the numbers of foreign
immigrants coming in are dropping away really fast, so that's
kind of going to slow us down a bit as well.

Speaker 2 (04:45):
All right, then, thanks for helping us make sense so
that New Zealand Herald Business editor at Large Liam Dan.

Speaker 1 (04:50):
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