NZ Economy
Technically, NZ is out of recession. The economy grew 0.2% in the first quarter of 2024, but growth is so soft that many are still feeling the sting of a sluggish economy. This has shown with retail card spending in May declining by 1.1%, making it the 4th consecutive month of decline.
House prices have also dropped, and pessimism reigns supreme in NZ at present. Both business and consumer confidence is dire as we live in an elevated inflation and interest rate environment. The NZ economy is currently in worse economic conditions than during the 2008 Global Financial Crisis.
We are not growing as fast as other countries because our Reserve Bank does not want us to grow. Governor Adrian Orr not only didn’t try to avert a recession but actually induced a recession to curb aggregate spending in the economy.
New Zealand’s economic woes lead directly back to the huge and wasteful spending by the Labour Government. The new Coalition Government has a huge job in reversing that wasteful spending, without fuelling a further deterioration of economic growth.
NEW ZEALAND GDP Growth Rate
GDP per Capita – NZ remains a laggard
According to 2024 International Monetary Fund data, NZ (at US$47,000) is ranked 27th, behind the average of advanced economies (US$52,000) and well behind our close neighbour Australia – ranked13th at US$63,000).
The highest five countries include:
1 Luxembourg US$140,000
2 Ireland US$118,000
3 Switzerland US$110,000
4 Norway US$102,000
5 Singapore US$92,000
Note: All of the top five, bar Luxembourg, have similar populations to New Zealand.
The big concern is that our per Capita GDP rate has dropped significantly more than our GDP – and what’s even more concerning is that even when we grow, we don’t seem to be better off.
According to new analysis by The Economist, NZ ranks 22nd in the world for gross domestic product per person, measured in US dollars. But as the publication acknowledges, sorting countries into rich and poor can be difficult.
Measures such as GDP are affected by population size (more people generally mean more output). And adjusting for population alone is not enough. Dollar income per person does not account for differences in prices between countries (a Big Mac, for example, will set you back more in some places than in others, even after converting into dollars). Nor does it account for productivity (overall output per hour worked).
To get a fuller picture, The Economist ranks countries by three measures: dollar income per person, income adjusted for local prices (known as purchasing-power parity) and income per hour worked.
And once the prices we pay and the hours we work are factored in, NZ barely sneaks into the top 50, lagging behind North America, Australia, the UK, almost all of Europe, Turkïye, the Arabian Peninsula and even the fast-growing South American oil state of Guyana. In the 38-member OECD, we rank 30th.
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