Her insights were super interesting so I thought I would share with you, dear Substack reader.
The winter months of April, May, and June were, in Sharon’s words, “dire”. Trump tariffs have rattled exporters and created uncertainty, while “dodgy data” due to years of unprecedented conditions has made forecasting even more of a gamble than usual. If the numbers you’re relying on are shaky, you’re essentially guessing. Even the Reserve Bank is in the process of overhauling its forecasting models. If the inputs are flawed, the forecasts are too and the RBNZ is trying to ensure it’s not flying blind when setting monetary policy.
She questioned whether New Zealand’s traditional economic seasonality might be shifting, noting that patterns in spending, tourism, and production no longer seem to follow the familiar rhythms economists have relied on for decades.
Wanting to give some positive news early on in the talk, she gave the government credit for its new Investment Boost policy, calling it a “well-timed stimulus,” but followed this with the caveat that she is sceptical that it will deliver any meaningful lift in productivity. That’s a fair take. Treasury themselves call it a short-term “shot in the arm” rather than a structural fix. The Investment Boost scheme offers targeted tax incentives to encourage businesses to bring forward capital spending. The aim is to stimulate investment in equipment, and technology.
Zollner didn’t mince words about the cost of living. She acknowledged that many Kiwis are struggling to keep their heads above water. She noted that back in around 2021, people noticed prices going up but mostly shrugged and bought the stuff anyway after a bit of a grumble. Now, they’re putting things back on the shelf and walking away. That shift in consumer psychology is massive and backed by retail data, says Zollner. People are trading down from branded to unbranded goods, from restaurants to takeaway, and from international fast food franchises to the local fish and chip shop.
However, meat and dairy are performing brilliantly for our export earnings.
Meat and dairy have long been the backbone of New Zealand’s export economy, together accounting for more than a third of our total goods exports. Global demand has been particularly strong in recent months, with high prices driven by tight supply in key markets and the competitive advantage of our seasonal production. For exporters and the rural economy, it’s a golden run. But for New Zealand households, the same high prices that earn us foreign exchange are showing up as painful grocery bills. It’s the classic commodity-exporter dilemma, what’s good for the macro picture can be brutal at the checkout.
As she reminded the room, there are always winners and losers in any economy, and right now farmers might be on the winning side while consumers feel like they’re bleeding out. Consumer confidence is obviously in the gutter, partly, Zollner says, because people just loathe inflation.
She pointed out that after the Global Financial Crisis, unemployment was actually much worse than it is now, but that doesn’t change the way people feel. In economics, perceptions can matter just as much as reality. Zollner’s point was that economic sentiment often turns well before the hard data does. People don’t need to see GDP figures to decide they feel worse off. The cues come from headlines, political rhetoric, and the general mood of the media cycle. So when she saw a promo for Paddy Gower’s Got Issues featuring him in full-throttle outrage about the cost of living, she took it as a cultural marker. If Paddy’s yelling about it, the recession vibes have fully penetrated the public psyche, whether or not the numbers back it up.
The construction industry, she said, is on the biggest rollercoaster of them all, lurching from booms fuelled by low interest rates and pent-up demand to slowdowns triggered by cost blowouts, labour shortages, and tighter lending. Building consents have fallen sharply from their pandemic highs, yet pockets of large-scale projects are still charging ahead, creating a patchwork market that’s impossible to summarise in a single headline. For tradies and developers alike, it’s a constant cycle of feast and famine and right now, the track feels more rickety than thrilling.
The housing market is seeing listings rise and prices revised down. It’s now cheaper to buy than build, which Zollner says is good for those with “deep pockets and long horizons.” For everyone else, rising rates, spiking insurance costs, and, (especially in Wellington’s case) falling rents are adding pressure. ANZ’s own forecast has house price growth in 2025 at just 2.5%, so this isn’t just vibes, it’s in the numbers.
On interest rates, the Official Cash Rate is just north of neutral. The Reserve Bank has all but announced a cut next week, and ANZ has another pencilled in for November. Zollner warned against “oversteering”, monetary as policy takes time to filter through, and too much fiddling could make things worse.
Turning to global politics, she said Trump’s new tariffs are manageable for New Zealand since only about 12% of our exports go to the US, and our big earners like dairy and beef have other markets. Brazil is in a far worse position, facing 40–50% tariffs. Our wine and seafood industries are more exposed but are smaller pieces of the overall economic pie. The bigger challenge, she suggested, is the volatility of Trump himself who is “all over the park,” and requiring the same diplomatic caution we use when dealing with China. His keep-’em-guessing Art Of The Deal strategy might make sense in real estate deals, but global trade is not a property development negotiation.
China, by contrast, is playing a long game. Eighty-eight percent of its goods are sold domestically, insulating its economy from the full force of global market swings. It sits on vast reserves of rare earth minerals, the essential ingredients for everything from smartphones to electric vehicles, giving it leverage in industries the rest of the world can’t function without. As Zollner put it bluntly, China is “not stupid.” It has positioned itself to be resilient, strategically self-sufficient, and far less vulnerable to the kind of trade shocks that keep smaller export-driven economies like ours awake at night.
At home, she said, the South Island is massively outperforming the North. Lower personal debt levels and fewer failed payments suggest households there are under less financial strain, and Zollner pointed to the rural, export-oriented nature of the South Island economy as a key buffer. Strong returns from agriculture and related industries mean many communities are still ticking over, even as urban centres in the North feel the pinch from higher mortgages, falling house prices, and sluggish service-sector activity. In short, the South’s economic base is keeping it steadier, while the North is more exposed to the pain points of a cooling property market and cost-of-living pressures.
Migration is steady and comparable to 2015 levels, but the net gain (arrivals minus departures) is low. Much of the current inflow is from poorer countries, filling roles in sectors like aged care, agriculture, and hospitality where New Zealand struggles to find local workers. Zollner noted that while this keeps certain industries afloat, it doesn’t necessarily deliver the productivity boost or income growth that higher-skilled migration can bring. With departures still high and the lure of higher wages overseas, particularly in Australia, the net result is a lot of churn rather than the sustained population growth that might meaningfully shift our economic trajectory.
She argued that the new visa for elderly parents is a mistake, pointing out that New Zealand already has an ageing population and a healthcare system under strain. Even with private health insurance, older migrants will inevitably require hospital beds, specialists, and aged-care resources that are already in short supply. Zollner’s point wasn’t anti-immigration in general; it was about capacity. In her view, adding more people into the highest-cost, highest-demand age bracket makes little economic sense when we’re struggling to meet the needs of the elderly Kiwis we already have.
Zollner is optimistic about AI, but wary of the blind spots in adoption, and not just in the usual “robots will take our jobs” way. Yes, there will be winners and losers (there always are) but her real concern is what happens when companies replace all the intern-level grunt work with algorithms. Those entry-level jobs are where people learn the ropes, make mistakes, and slowly work their way up. Cut that rung off the ladder and you’re left with a workforce that never got the training ground they needed and one day you’ll look around and realise no one actually knows how to do the job.
She didn’t pull punches on the gas exploration ban. Jacinda Ardern’s government, she said, scared off billions in investment with a stroke of the pen, hiked energy costs for businesses and households, and made us more reliant on burning coal. The reversal has tempted some investors back, but the damage isn’t fully undone. As long as Labour refuses to rule out reimposing the ban, the uncertainty will keep choking long-term projects. It’s the perfect example of how to tank confidence in an industry while pretending you’re helping the planet.
On the current government, she said that in winning the election they were handed a “hospital pass.” Labour doubled national debt from 18% to over 45% of GDP and spent “two crises worth of buffer on one crisis.” Despite the headlines, she doesn’t see the government as austere, noting Ruth Richardson would never have signed off on Nicola Willis’ budget. I mentioned this to Ruth today and she quipped that National is “transactional, not transformative”.
The reality, Zollner said, is that the Government is “damned if they do, damned if they don’t” when it comes to cutting spending. But, she is impressed with how they are cutting unnecessary regulations, rather than splashing cash. She called it a smart way to improve the business environment. Stripping out pointless compliance costs frees up time, money, and energy for businesses to invest in growth, hire staff, and innovate. It’s the sort of reform that doesn’t blow out the deficit, doesn’t require new taxes, and sends a clear signal that the government is serious about making it easier to operate in New Zealand. In a climate where every dollar counts, policy changes that unclog the system can be worth more than another round of subsidies or grants.
Zollner’s view of democracy was neatly summed up in a line borrowed from Churchill: it’s the worst political system… except for all the others we’ve tried. It was a reminder that while we can (and should) be critical of how policy gets made, the alternative models can come with far heavier costs. In economics as in politics, imperfection is sometimes the best we can do.
An anecdote about a builder she spoke to got a good chuckle from the room. She said the straight talking business owner said, “I love recessions because all the cowboys move to Queensland.” Downturns can have a cleansing effect on industries. When the easy money dries up, the fly-by-nighters and corner-cutters pack up and leave. What’s left are the operators who can weather tough conditions, run their businesses well, and keep their clients. In its own rough-edged way, the comment echoed Zollner’s broader theme: in every economic cycle there are winners and losers, and sometimes the shake-out leaves the sector healthier than it was before.
If there was one overarching takeaway from Zollner’s talk, it was that the economy is not a morality tale. It’s Darwinian, brutal, and constantly shifting. There will always be winners and losers, often decided by timing and luck as much as skill. Recessions don’t last forever, but neither do recoveries, and the next turning point can come faster than anyone expects. The real challenge is to smooth out the lurching, build resilience during the good patches, and resist getting swept up in every bout of “peak recession” theatre the media is selling. It’s about keeping a steady hand on the wheel… even when the commentators are screaming that we’re headed for a cliff.
Sharon Zollner was an engaging and super knowledgable speaker and I thoroughly enjoyed the lunch at Perch! I hope I have faithfully reproduced the thoughts she shared with us and the vibes of the economy!
Ani O'Brien comes from a digital marketing background, she has been heavily involved in women's rights advocacy and is a founding council member of the Free Speech Union. This article was originally published on Ani's Substack Site and is published here with kind permission.
No comments:
Post a Comment