.....but now economic conditions are biting into living standards of the average Kiwi
Just as economic conditions are biting into the living standards of the average New Zealander, so are they darkening for the Labour government.
For Chris Hipkins, who has given Labour a bounce in the polls, the charmed run he has enjoyed could be coming to a brutal end.
He may be pinning his hopes on his Finance Minister, Grant Robertson, working a miracle in a budget that will produce a glow to warm the average taxpayer. The problem for Robertson, though, is that if he spends up large, as he did through the Covid pandemic, he may just prolong the agony inflicted by high prices, because the Reserve Bank will have to sustain interest rates at a peak as it tries, in Governor Adrian Orr’s phrase, to “cool the jets”.
In any case, the Prime Minister contends prices are beginning to stabilise.
That doesn’t wash with the average householder who has just seen — and felt — the impact of food prices rising by 12.1%.
The April 1 boost to benefits, large as it was, was supposed to offset rising costs but failed to do so.
Similarly, the headlines this week portended how the looming recession could be be twice as deep as previously thought, with Kiwis being warned to prepare for a tough rest of the year.
Food prices are rising at their fastest annual rate in more than 30 years and many Kiwis are struggling to afford the basics.
NZ has another serious economic issue, the dismayingly big gap between export receipts and import payments. ANZ Bank chief economist Sharon Zollner says this shows New Zealanders have been living beyond their means.
ASB is predicting a 2% contraction to gross domestic product (GDP) by early 2024, which is double the 1% economic shrinkage that the bank forecast in its previous quarterly update.
The country’s expected recession is likely to set in earlier than expected, according to the latest ASB Economic Forecast, with GDP falling 0.6% in the December 2022 quarter.
ASB chief economist Nick Tuffley says high-interest rates and inflation will continue to restrain consumer spending in the coming year, with homeowners feeling the strain and pain the most.
Tuffley claims the Reserve Bank (RBNZ) is reaching the end of its Official Cash Rate (OCR) rises, despite inflation being anticipated to remain above 7% for the first half of this year.
“Things have overheated, and the stimulus to get us through the pandemic has been arguably too successful at keeping the economy running along, so now we’re feeling the effects of that and the economy being stretched,” Tuffley said.
“We expect rising living costs to add around $150 a week to household spending this year, and income growth is not likely to keep pace with this, despite another year of strong wage growth. It’s going to be a tough year, and home borrowers will feel these impacts disproportionately.”
The problems don’t end in the households in the cities. Farmers on whom the country depends for most of the countries’ export income have been hard hit by inflation, as well as by the climate warriors who are calling on the government to cut herd numbers (and methane emissions) just when the nation needs every cent it can earn from export receipts.
So the issues are piling up on the government. And even if Hipkins can solve them all, will the average punter think he deserves another term, as government debts pile up to be paid at a later date?
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
In any case, the Prime Minister contends prices are beginning to stabilise.
That doesn’t wash with the average householder who has just seen — and felt — the impact of food prices rising by 12.1%.
The April 1 boost to benefits, large as it was, was supposed to offset rising costs but failed to do so.
Similarly, the headlines this week portended how the looming recession could be be twice as deep as previously thought, with Kiwis being warned to prepare for a tough rest of the year.
Food prices are rising at their fastest annual rate in more than 30 years and many Kiwis are struggling to afford the basics.
NZ has another serious economic issue, the dismayingly big gap between export receipts and import payments. ANZ Bank chief economist Sharon Zollner says this shows New Zealanders have been living beyond their means.
ASB is predicting a 2% contraction to gross domestic product (GDP) by early 2024, which is double the 1% economic shrinkage that the bank forecast in its previous quarterly update.
The country’s expected recession is likely to set in earlier than expected, according to the latest ASB Economic Forecast, with GDP falling 0.6% in the December 2022 quarter.
ASB chief economist Nick Tuffley says high-interest rates and inflation will continue to restrain consumer spending in the coming year, with homeowners feeling the strain and pain the most.
Tuffley claims the Reserve Bank (RBNZ) is reaching the end of its Official Cash Rate (OCR) rises, despite inflation being anticipated to remain above 7% for the first half of this year.
“Things have overheated, and the stimulus to get us through the pandemic has been arguably too successful at keeping the economy running along, so now we’re feeling the effects of that and the economy being stretched,” Tuffley said.
“We expect rising living costs to add around $150 a week to household spending this year, and income growth is not likely to keep pace with this, despite another year of strong wage growth. It’s going to be a tough year, and home borrowers will feel these impacts disproportionately.”
The problems don’t end in the households in the cities. Farmers on whom the country depends for most of the countries’ export income have been hard hit by inflation, as well as by the climate warriors who are calling on the government to cut herd numbers (and methane emissions) just when the nation needs every cent it can earn from export receipts.
So the issues are piling up on the government. And even if Hipkins can solve them all, will the average punter think he deserves another term, as government debts pile up to be paid at a later date?
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
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