NZ Economy: Turning the page

The latest BusinessNZ Planning Forecast shows business confidence is increasing, but New Zealand’s economic growth is still expected to be relatively low over the forecast period out to December 2025.

Consumer confidence has suffered, due in part to continued inflation and the likelihood that interest rates will remain at elevated levels for longer. BusinessNZ Director of Advocacy Catherine Beard says inflationary pressure continues to haunt the economy.

“The Reserve Bank’s latest review of the official cash rate suggests it will not hesitate to raise rates further if necessary. The cost of capital is also likely to stay higher for longer, not something businesses and households were hoping to hear this Christmas.”

Beard says a significant boost in net migration has had a positive impact on our labour supply, “but will also boost demand for many goods and services – and housing”.

Further abroad, commodity prices are in flux, with some recent improvement in agricultural product prices.

“Better prices for our agricultural goods is a welcome step toward improved outcomes, but producers are still burdened by high input costs which are eating away at profitability.”

Economic growth is expected to be modest globally over the next few years, with concern about ongoing inflationary pressure, higher cost of capital and geopolitical tensions still lingering.

The BusinessNZ Economic Conditions Index for the December 2023 quarter remains in negative territory and sits at -4 for the December 2023 quarter, an improvement of 13 on the previous quarter and an improvement of 8 on a year ago.

The index tracks 33 economic indicators including GDP, export volumes, commodity prices, inflation, debt, and business and consumer confidence. The full planning forecast can be found on the BusinessNZ Website.

11 Dec, 2023

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