The GDP data set for release today (at 10.45am) is widely expected to show New Zealand moving out of a technical recession. However this will only tell part of the story.
Infometrics economist Brad Olsen recently told Newshub that even if we do see that shift, the country will remain in a “shadow recession”.
What he means by this is that the underlying conditions are essentially being covered up by high migration, which makes it seem that things are tracking better than they are.
Speaking to NZ Herald’s The Front Page podcast, NZ Herald business editor-at-large Liam Dann says we should really be looking at the GDP per capita to get a sense of what the economy feels like to the average New Zealander right now.
“We’ve added an enormous number of people come to New Zealand,” says Dann.
“There’s been a huge migration boom … and that’s buoyed the economy. This means that while the top line might look okay, the economy underlying that is really obviously in pretty bad shape… Many businesses will still feel like they’re in a recession, regardless of what that top-line number says.”
Now that politicians are on the campaign trail, the ‘R’ word has been thrown around regularly, with the Opposition using it as a tool to point out that the Government has mismanaged the country’s finances. Labour has meanwhile defended its track record, saying that it’s part of the process and that things will get better.
But Dann says whether the country is in a technical recession right now isn’t as relevant as what Kiwis will actually face in the coming year.
“What’s coming up is going to be more of a recessionary issue that the Government has to deal with, which means rising unemployment and things like that … Businesses are preparing for a tough patch. They know it’s been pretty tough and it’s not going to turn around for them quickly.”
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Unemployment continues to remain below 4 per cent according to the latest data, but there are signs of this starting to shift.
“Job market data shows that the excess of advertised jobs is starting to dry up, so if you do lose your job, it’s harder to walk into a new one. There’s less mobility in the job market. And younger people coming into the job market are going to find it a bit harder. It’s definitely tightened up in some ways.”
- So, where does this leave the average family?
- How much longer will high mortgage rates stay?
- What impact will rising petrol prices have on inflation?
- And how is Aotearoa performing compared to other countries?
To get the full story, listen to the full episode of today’s The Front Page.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.