Finance Minister Nicola Willis on recession, GDP

Finance Minister Nicola Willis spoke to Mike Hosking on Newstalk ZB this morning. Photo / Mark Mitchell.

Nicola Willis promised Kiwis that there’s still “hope” despite the bleak outlook for the economy.

Finance Minister Nicola Willis spoke to Mike Hosking on Newstalk ZB this morning after yesterday’s announcement of a recession.

Willis said very high inflation and rising interest rates had been prolonged.

“There’s been a big hit to the growth forecast.”

On Q1, Willis said, “There is hope.”

Nicola Willis: "The economy has barely grown in several years, and that is a real worry." Photo / Mark Mitchell

“Both the Treasury and the [Reserve] Bank are forecasting growth this year.”

She said tourism was coming back and the dairy price was okay, as examples of positive moves for the economy. Hosking disagreed that the dairy price was okay.

“People focus on the headlines with the recession and the GDP. But that has happened despite a very fast-growing population and immigration,” Willis said.

“So on a per-capita basis, on a per-person basis, the economy has barely grown in several years, and that is a real worry.”

“There are always people that think there’s a money tree at the back of the garden.”

“I don’t think we have seen the value for the borrowing the last Government took on.”

She said the Government cuts and restructuring won’t have a huge impact on the recession because the money will go to more “front-line” workers for Government organisations.

Gross domestic product (GDP) fell 0.1 per cent in the December 2023 quarter, compared with the September quarter, which also shrank.

Economists traditionally define a recession as two successive quarters in which the economy contracts.

GDP per capita fell 0.7 per cent in the last three months of the year, Stats NZ said yesterday.

Real gross national disposable income fell 1.4 per cent.

Wholesale interest rates and the New Zealand dollar fell in response to the news.

Yesterday, Prime Minister Christopher Luxon outlined the Government’s plan for the next 100 days and blamed the recession on Labour.

“Sadly, the previous Government has borrowed more. We’ve got to face up to that. We’ve got nothing to show for it. We’ve got a big fiscal repair job to do,” Luxon said.

Jaime Lyth is a multimedia journalist for the New Zealand Herald, focusing on crime and breaking news.