{"id":8677,"date":"2023-12-15T05:15:18","date_gmt":"2023-12-14T16:15:18","guid":{"rendered":"https:\/\/thebuzz.apnanetwork.co.nz\/?p=8677"},"modified":"2023-12-15T05:15:18","modified_gmt":"2023-12-14T16:15:18","slug":"double-dip-recession-likely-kiwibank-economist","status":"publish","type":"post","link":"https:\/\/thebuzz.apnanetwork.co.nz\/?p=8677","title":{"rendered":"Double-dip recession likely – Kiwibank economist"},"content":{"rendered":"

The Reserve Bank (RBNZ) got what it wanted and should back down on its threat of future interest rate hikes, a high-profile economist says.<\/p>\n

The\u00a0economy shrank in the third quarter<\/a>\u00a0as households spent less, exports fell, and manufacturing activity decreased, new figures showed on Thursday.<\/p>\n

“Not only did we get a contraction on the quarter, the statisticians revised down all the previous quarters over the last year or so,” Kiwibank chief economist Jarrod Kerr told\u00a0Checkpoint<\/em>.<\/p>\n

“So our economy is actually, you know, 2 percent smaller than we thought it was. What that means is that the government’s tax take is going to be less – the economy is simply smaller, less GST, less corporate tax.”<\/p>\n

Stats NZ data showed seasonally adjusted gross domestic product (GDP) fell 0.3 percent in the third quarter, the opposite of the RBNZ’s forecast growth of 0.3 percent.<\/p>\n

“We are in recession – we recorded one last summer and we’re going to record one this summer,” Kerr said. “So the rapid rise in interest rates, the RBNZ has hiked aggressively with a heavy hand, has had an impact and households are hurting and, and so are small-to-medium businesses.”<\/p>\n

The official cash rate has risen from 0.25 percent two years ago to 5.5 percent. RBNZ head Adrian Orr\u00a0admitted its goal was to engineer a recession<\/a>\u00a0to bring inflation back down to its 1-3 percent target range.<\/p>\n

In November\u00a0the RBNZ said inflation was dropping, but not as quickly as it would like<\/a>\u00a0– so further hikes could be on the cards.<\/p>\n

“This is exactly what they’ve been trying to engineer – they told us, you know, late last year that they wanted to engineer a recession. They needed to do so in order to get inflation pressure back down. So from their point of view, it’s kind of ‘job done’.<\/p>\n

\"Kiwibank<\/p>\n

Jarrod Kerr.\u00a0<\/span>Photo:\u00a0Supplied \/ Gino Demeer<\/span><\/p>\n<\/div>\n

“What we’re saying is that, you know, the job is done – stop telling us that you’re going to keep hiking rates because it’s not needed\u2026 The next discussion should be rate cuts, not hikes.”<\/p>\n

The fall in GDP comes despite a huge influx of migrants.<\/p>\n

“We’ve got a contraction of 0.3 percent despite the fact that we’ve imported 130,000 net migrants over the last year.<\/p>\n

“So when you look at things on a per capita basis, per head, they were down 0.9 percent on the quarter and we’re down 3 percent over the year.<\/p>\n

“So, you know, the RBNZ rate hikes are having a big impact on households and we’ve seen consumption coming off even though there’s a lot more people in the economy.”<\/p>\n

The consequences posed a problem for the new government, Kerr said.<\/p>\n

“We’re basically waiting for the Treasury’s numbers next week to get a good handle. But it’s going to be weaker than they thought, and it’s going to be weaker than what was in the Budget earlier this year.<\/p>\n

“That’s the main point – less revenue. That means it’s going to be tougher on the other side, on the spending side.<\/p>\n

“Potentially, you know – they’re going to have to work through what they can cut and what they, what they are gonna stick to with their, with their promises.<\/p>\n

“It’s going to be a very tough job. These numbers don’t help.”<\/p>\n

The government has scrapped numerous initiatives put in motion by its predecessor to help pay for its promised tax cuts and\u00a0reinstatement of deductibility for landlords<\/a>.<\/p>\n

Kerr said there was some light at the end of the tunnel.<\/p>\n

“Look, I think there are some bright spots. I mean, the housing market seems to be recovering quite nicely. We’ll see house price gains next year. That’ll be good for a lot of Kiwis.<\/p>\n

“Tourism is picking up. We’re hearing anecdotes of Chinese tourism slowly picking up, which is key. They’ve been a missing ingredient. So hopefully we get a bumper summer, you know, particularly in tourist numbers and student numbers and you we’ll be on a better footing, I think later next year.”<\/p>\n

rnz<\/p>\n","protected":false},"excerpt":{"rendered":"

The Reserve Bank (RBNZ) got what it wanted and should back down on its threat of future interest rate hikes, a high-profile economist says. The\u00a0economy shrank in the third quarter\u00a0as households spent less, exports fell, and manufacturing activity decreased, new figures showed on Thursday. “Not only did we get a contraction on the quarter, the […]<\/p>\n","protected":false},"author":6,"featured_media":8678,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[222,174],"tags":[],"class_list":["post-8677","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news","category-nz-news"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/posts\/8677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8677"}],"version-history":[{"count":1,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/posts\/8677\/revisions"}],"predecessor-version":[{"id":8679,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/posts\/8677\/revisions\/8679"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=\/wp\/v2\/media\/8678"}],"wp:attachment":[{"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thebuzz.apnanetwork.co.nz\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}