New Zealand Economy

Last month, Infometrics warned that New Zealand is facing a “brain drain” as prime 25-44-year-olds relocate to Australia in pursuit of employment and higher pay.

On Wednesday, the Reserve Bank of New Zealand will hold its next monetary policy meeting, where it will decide whether to change the official cash rate, which is currently sitting at a highly restrictive 5.50%.

On Wednesday, Statistics New Zealand released labour market data for the June quarter, which revealed that New Zealand’s unemployment rate rose 0.2% over the quarter to 4.6%, in line with the Reserve Bank’s forecasts.

The Reserve Bank of New Zealand has clearly erred in leaving the official cash rate at its highly restrictive level of 5.50%.

Independent economist Tony Alexander has published a detailed report on New Zealand’s economy and labour market, which is based in part on his latest business survey.

ANZ has released research showing that a large number of Kiwis are moving to Australia for better job opportunities.

Last week’s benign Q2 CPI print has New Zealand’s economists urging the Reserve Bank to commence an interest rate easing cycle.

Independent economist Tony Alexander has written a detailed note on New Zealand’s stagflation economy and its implications for interest rates.

New Zealand’s Q2 Consumer Price Index (CPI) was released on Wednesday. Inflation was lower than expected in the June quarter, with consumer prices rising by 0.4%. That saw the annual inflation rate slow to 3.3% (down from 4.0% in the year to March).

It is becoming increasingly clear that the Reserve Bank of New Zealand’s decision to hold the official cash rate at a highly restrictive 5.5% is a mistake.

The Reserve Bank of New Zealand this week left the official cash rate on hold at an overly restrictive 5.50%.

Earlier this month, consultancy Infometrics warned that New Zealand faces a “brain drain” as prime 25-44 aged residents move to Australia in search of work and better paying jobs.

Kiwibank and Bank of New Zealand (BNZ) economists believe that the Reserve Bank of New Zealand needs to commence an interest rate cutting cycle to avoid a hard economic landing.

Despite New Zealanders suffering the longest and steepest decline in real per capita GDP since the Global Financial Crisis and all forward-looking indicators pointing to a deepening recession, the Reserve Bank of New Zealand is tipped to keep the official cash rate (OCR) on hold at 5.5% for the remainder of this year.

It is becoming increasingly clear that monetary conditions in New Zealand are too tight following the Reserve Bank’s 5.25% interest rate hikes, which have sent the economy into a tailspin.

It is hard to believe that the Reserve Bank of New Zealand’s May Monetary Policy Statement lifted its forecast for interest rates.

New Zealand’s economy may have emerged from recession in Q1, courtesy of headline GDP growth of 0.2%.

On Thursday, Statistics New Zealand released national accounts data for the March quarter, which showed that the economy emerged from a technical recession, growing by 0.2%. However, owing to New Zealand’s historically high population growth (immigration), GDP in per capita terms fell by 0.3%—the sixth consecutive quarterly decline.

Earlier this week, Westpac tipped that New Zealand’s real GDP would decline by 0.2% in the March quarter to be 0.3% lower year-on-year.

New Zealand’s economy continues to plunge deeper into recession ahead of this week’s Q1 national accounts release.

Westpac forecasts that New Zealand’s economy will contract deeper into recession when the official Q3 national accounts are released on 20 June.