On Thursday, Statistics New Zealand released the Q4 national accounts, which were an absolute shocker.
Overall GDP contracted by 0.1% in the December quarter, missing economists’ forecasts of a 0.1% rise.
Along with some modest downward revisions to recent history, GDP growth was 0.3% weaker year-on-year than the Reserve were expecting.
“In the context of the very strong population growth that New Zealand is currently seeing, a flat outturn for GDP is quite a soft result”, Westpac noted.
“Output was down 0.7% in per capita terms for the December quarter and has fallen by 3.1% compared to a year ago”.
The next chart from Dr Cameron Murray from Fresh Economic Thinking shows the collapse in both per capita GDP and real gross disposable income:
Westpac believes the “worst has probably passed in terms of the quarterly GDP outturns”, with “some of the higher-frequency activity indicators looking a bit perkier in the early part of this year, backing up the lift in business confidence that we’ve been seeing in recent months”.
Even so, Westpac are still “forecasting a mere 0.8% rise in GDP over 2024, which is still almost certain to trail well behind population growth”.
Indeed, with New Zealand’s population growing at a frothy 2.7% annual rate, Kiwis will be mired deep in a per capita recession.
The Reserve Bank needs to cut the official cash rate to stem the bleeding.
