There never was a “rockstar” economy. There was a period of high international dairy prices and artificial stimulus from the Christchurch rebuild. Take those away and what have you got? Not much:
Economy expands 0.2pc – weakest quarterly growth in two years
New Zealand’s $239 billion economy grew at its weakest quarterly pace in two years, driven by a dairy-led contraction in agriculture and the impact on the mining sector of a drop in oil and gas activity. The New Zealand dollar fell.
Gross domestic product grew 0.2 per cent in the first three months of the year, according to Statistics New Zealand.
Top economist warns of NZ recession risk
BNZ head of research Stephen Toplis said the biggest shock to New Zealand’s economy had been the ongoing demise of the dairy sector.
“In part, the demise of dairy will be having an impact on economy-wide confidence, such as reflected in the recently released ANZ [business confidence] survey,” Toplis said. “In turn these confidence readings are also useful in predicting future GDP [gross domestic product] growth. Unfortunately, the trend in confidence is down.”
BNZ is forecasting annual average growth this year of 2.4 per cent, falling to 2.1 per cent over 2016 and 2017.
“That said, the balance of risks around our forecast is becoming more skewed to the downside,” Toplis said. “Indeed, so much so that it is not hard to envisage a scenario where a recession becomes imminent.”
Here’s Brian Fallow in The Herald today:
Recession lurks in shadows
Weak dairy, business outlook signs growth could be stopped in its tracks.
New Zealand is enjoying 3.2 per cent economic growth and 0.1 per cent inflation, the statisticians tell us, but Bank of New Zealand economists warn we could see those numbers switch.
In the wake of a further lurch lower in export dairy prices and weak readings for consumer and business confidence, over the past two days market economists have revised down their outlook for interest rates. …
The NZ economy needs to be fundamentally reshaped, and the only sensible goal to work towards is a sustainable green economy. Renewable energy generation, low carbon emissions, locally made products – smart green growth.