Ardern’s fate sealed by New Zealand’s economic collapse

A week ago, the Bank of New Zealand (BNZ) forecast the economy would enter a recession next year that could be deeper than anticipated.

This prediction came after ANZ’s June business survey “was littered with indicators that fit with our view that the economy is headed into recession”, according to BNZ head of research Stephen Toplis. “If anything, they suggest any such recession might be deeper than we have pencilled in”, he added.

ANZ’s business survey tanked to -62.6, nearing the all-time low of -66.6 hit in April 2020 when New Zealand was stuck in its first lockdown of the pandemic:

New Zealand business confidence

Business confidence collapses.

New Zealand’s consumer confidence has similarly collapsed to recessionary levels, with consumers especially concerned about the nation’s current and future economic conditions:

New Zealand consumer confidence

Consumer confidence has collapsed to recessionary levels.

The collapse in consumer confidence is especially pertinent given its strong historical correlation with household consumption – the New Zealand economy’s biggest driver. Where household consumption goes, the economy typically follows:

Consumer confidence and consumption spending

Household consumption typically tracks consumer confidence.

The timing of a New Zealand recession in 2023 could not be worse for Jacinda Ardern’s Labour Government, which is already trailing well behind the Opposition National Party in the polls:

New Zealand voting intentions

Ardern’s Labour Government trailing 8 points behind National.

With the Reserve Bank anticipated to continue increasing interest rates, house prices are headed for steep falls at the same time as the economy stumbles toward recession. This presents a toxic cocktail for the Ardern Government as it seeks to secure a third term at the general election in September 2023.

The way the economic cards are falling, Jacinda Ardern’s electoral fate looks sealed with a loss, due in no small part to the Reserve Bank’s aggressive monetary tightening.

Unconventional Economist


  1. Hugh PavletichMEMBER

    Essential viewing …

    ANZ NZ Bank Chief Economist Sharon Zollner talks the most sense here …

    Will rising interest rates around the world tip the global economy into recession? | 7.30 … Australian Broadcasting Corporation
    Cost of living and salaries drive more workers to eye move offshore … Brianna McIlraith … Stuff NZ

  2. With the OCR already above levels seen pre covid , (at a time the RBNZ was cutting rates )and the majority of canny economists now having 50bps penciled for next week , New Zealand is certainly with the pack leaders, although a little behind Pakistan . Given the RBNZs woeful lack of forecasting abilities,with almost all the entire data within their fingers, guessing GDP printing at 0.7 for the last quarter, only to see it turn negative, making sense of anything the RBNZ may do is becoming fruitless.
    Yesterdays average bank yields on residential mortgage lending data saw an increase ( May) to 3.36 %, up from 3.01 % a year prior, and above the October low of 2.84 percent, that is an additional 1.2 billion in interest payments stripped from the economy over the year, which will not be spent elsewhere. Given Australia has a higher weighting of variable mortgages and the RBA apparently on same track, the trajectory of Australia’s economy will play catch up

    • They were predicting 1.6%q/q in Q1 in the February MPS from memory.

      This was all predictable from the back end of last year…in fact I did predict it, in a 30 odd page PowerPoint I sent my clients. The recession is going to be a doozy and its underway right now, regardless of what distortions Q2 GDP may throw up.

  3. Camden HavenMEMBER

    The men in Black suits will be visiting NZ soon.
    A world recession will be devastating for indebted countries that like NZ have the appearance of a first world living standards but it’s supported by a third world economy plus debts

  4. Hugh PavletichMEMBER

    This is very spooky …

    … NZ is seen by potential inbound migrants as a big fail on living costs, housing costs, immigration restrictions and unpredictable covid restrictions …

    Employers and Manufacturers Association says NZ’s high cost of living, housing putting overseas workers off … Ireland Hendry-Tennent … Newshub (regrettably VIDEO not available outside New Zealand) …

    The Employers and Manufacturers Association says New Zealand’s high cost of living is putting off overseas workers.

    It comes as industries across the country struggle with dire staffing shortages. Healthcare, agriculture, teaching and hospitality are being hit particularly hard.

    Speaking with AM on Wednesday National leader Christopher Luxon warned if the worker shortages aren’t fixed, New Zealand’s international reputation could be damaged.

    “The problem is that many of our tourism restaurants across New Zealand, our tourism attractions are actually not operating at full capacity.

    “It’s a real challenge and it won’t take much for some bad experiences to lead… New Zealand gets a bad reputation for poor service,” he said.

    But it seems our reputation might already be in trouble – but not in the way he warned.

    Earlier on Wednesday, head of advocacy and strategy at the Employers and Manufacturers Association (EMA) Alan McDonald said the country’s high costs are putting potential migrants off.

    “I think we’ve probably lost our lustre as a great place to come,” McDonald told AM’s Ryan Bridge. … read more via hyperlink above …
    … According to the IPSOS NZ Issues Monitors immigration is not a major issue with New Zealanders … No 16 of 20 at 4% (Page 7) …

    17th Ipsos NZ Issues Monitor – June 2022

  5. Camden HavenMEMBER

    What is the great reset going to look like?

    After discarding the many false options that are really only another can kick ending in hyperinflation I a thinking….

    1. the time line is perhaps 20 + years and that is why it’s difficult to see/understand.

    2. Private banking is not part of the plan

    3. Elites have concluded that zero interest rate is a total fail and if continued will result in complete collapse of western democracies.

    More to come

  6. kiwikarynMEMBER

    This is the state of New Zealand. People literally dying in their cars because they dont have housing.
    Not that Jacinda Ardern gives a hoot – she’s busy shopping up a storm in Australia at David Jones while she waits for her Pacific Island junket to begin. She has spent most of the last 3 months overseas. Europe, America, Australia, Pacific Islands.

    • She campaigned on improving wellbeing and made a thing of ‘kindness’ yet shes presiding over a callous government who tear gasses its own people.

      I could see this coming back in 2020 when people lost all sense of reason and allowed themselves to get caught up in the hype around COVID. It got stamped out because NZ was an island nation with a massive natural moat and the ability to quarantine itself; for a time… it had bugger all to do with her or her policies.

      I’m hearing horror stories about the state of the health system, my sister runs a food bank and she’s run off her feet- boom times for food banks – and we all know how utterly screwed first home buyers are.

      When the dust settles, the Labour Party will be in ruins. But no worries, Jacinda will pick herself up and get a cushy job offshore at the UN or OECD or World Bank, where she can create chaos on a global scale.

      • kiwikarynMEMBER

        Obtaining health care is worse if you are white, as you are now bottom of the priority list. All diagnostic screening and early interventions have been delayed for people who are not Maori/Pacific Islander, along with being sent to the bottom of the huge lists for elective surgery. The new Health System has been divided in two – half is now available only for Maori/Pacific Islanders, and everyone else has to scramble for the rest. This is to “improve health equity” and “de-colonialise” the healthcare system. I’m sure there is a huge amount of “white flight” going on to Australia, but no-one is talking about who exactly is leaving and why.

  7. Hill Billy 55MEMBER

    No one has offered Scomo a gig yet.
    He likes it in the front of a jet
    He talks a lot about his Faith
    and is dodgy on his math

    So give him a call he’s available now
    And he doesn’t mind the what and how
    But don’t ask him, where or why
    He had a holiday in gay Hawaii.

  8. Hugh PavletichMEMBER

    The Dominos They Are Afallin’: With Tarric Brooker … Martin North … Digital Finance Analytics
    New Zealand’s housing market cooling rapidly … Global Property Guide
    Compare this housing bubble deflation velocity … at the same stage … and going forward … with earlier housing bubbles …

    Housing Bubble – Wikipedia

  9. Hugh PavletichMEMBER

    New Zealanders may soon get more rights in Australia … Joanne Tran … The Australian

    Kiwis living in Australia ‘over the moon’ at new pathway to citizenship … Nadine Porter and Justin Wong … Stuff NZ

    • drsmithyMEMBER

      Don’t have a problem with streamlining AU citizenship for Kiwis (apparently made quite bureaucratic and expensive by the Coalition), but voting and long-term social security access should be citizens only.

      • SkepticviewerMEMBER

        Australians receive full access to Social Security benefits in NZ. So the move does have merit, also by allowing access to benefits Australia becomes more attractive to NZers, especially the educated English speaking workers, so it is them to fill skill shortages or well your know the third world.

    • I didn’t see Kiwis in Australia actually asking/demanding voting rights.
      I wonder if NZ will be heading in the direction on South Africa where they will try and prevent their overseas citizens from voting back at home by saying “Oh but you can vote in Australia, and you can’t have two votes”.

    • kiwikarynMEMBER

      A pathway to citizenship for New Zealanders who wish to permanently reside in Australia should be allowed, say after 10 years of working and paying taxes. Once you are a citizen then social security and voting rights come automatically. Until then, New Zealanders are just guests in Australia and should be treated as such. And I say that as a Kiwi who spent 13 years living in Australia.
      As for the 501 deportees, I think anyone who moved to Australia as a child should be treated as Australian, but anyone who moved there as an adult (over 18) needs to take responsibility for their actions. Do the crime, get sent back home.

  10. Hugh PavletichMEMBER

    Barfoot & Thompson auctioned 101 properties over the last week, half as many as a year ago, with less than a quarter selling under the hammer compared to two thirds last year … Greg Ninness … Interest Co NZ

    Up to 1000 new homes approved for outskirts of Christchurch despite city opposition … Liz McDonald and Amber Allott … Stuff NZ

  11. Hugh PavletichMEMBER

    Average home values across the country have dropped more than $52,577, down 4.9% since the beginning of this year, according to QV’s latest House Price Index. … Sally Lindsay …Good Returns

    Are any of the ‘solutions’ to the housing crisis working? … Miriam Bell … Stuff NZ

    Building more houses, faster – the Government project to drastically shorten the amount of time it takes to build a house … Dileepa Fonseka … Stuff NZ–the-government-project-to-drastically-shorten-the-amount-of-time-it-takes-to-build-a-house

    Government’s plan to develop a comprehensive New Zealand freight and supply chain strategy questioned … Gareth Vaughan … Interest Co NZ

  12. Hugh PavletichMEMBER

    Note CoreLogic Australia’s report today (10 July) on the accelerating deflation velocity of the Australian capital cities … scroll down …

    Compare this housing bubble deflation velocity … at the same stage … and going forward … with earlier housing bubbles …

    Housing Bubble – Wikipedia

  13. Hugh PavletichMEMBER

    The number one reason over-65s take out reverse mortgages … Rob Stock … Stuff NZ

    Repaying debt has become the most common reason retirees take out reverse mortgages, according to one bank.

    Heartland Bank passed the milestone of having approved 20,000 reverse mortgages earlier this year, with older homeowners borrowing against the equity in their homes, and only paying it back when they decide to sell up and move somewhere new.

    But no longer do home improvements and essential repairs top the list of reasons people borrow against their homes later in life, says Andrew Ford, general manager of reverse mortgages at Heartland. … read more via hyperlink above …

    RBNZ Survey: 73% Of Experts Expect A Recession Before 2025 … Finder / Scoop NZ

  14. Hugh PavletichMEMBER

    Doctors fear ‘catastrophic collapse’ of health system …

    ‘It will break many’: doctors’ survey paints clear picture of workforce crisis … Rachel Thomas … Stuff NZ

    Hopelessness, despair and fear patients will die in waiting rooms – doctors across all aspects of patient care say the health system is beyond a crisis and they want Government to acknowledge that.

    The survey, carried out by the New Zealand Women in Medicine (NZWIM) Charitable Trust, collated more than 900 responses from doctors working across 30 different areas of medicine.

    “The results indicate that we are at risk of a catastrophic collapse of the healthcare workforce,” authors wrote in a letter to Prime Minister Jacinda Ardern, health and associate health ministers and leaders of Te Whatu Ora Health NZ on Monday. A total of 923 doctors in GP clinics and hospitals signed their names to the letter, while survey feedback was anonymised.

    “So many [nurses] off sick (and some of them because of burnout) that we have to close areas of the department or work there on our own with no nursing support… Our triage nurses are so afraid that someone will die in the waiting room – so they are all resigning as well,” one emergency department doctor said in the survey. … read more via hyperlink above …

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