It has been a good year so far for most parts of regional New Zealand, with much of the country enjoying healthy economic growth across a range of spending, investment, and labour market indicators. For many places, renewed interest in their local economies has been a welcome change, after years of subdued spending and population stagnation. This article gives a quick round up of some key themes apparent in Infometrics’ June 2016 Quarterly Economic Monitor, with links to more insights about selected areas.
Sky-high net international migration has been a key driver of economic growth in the New Zealand economy over recent years. Even though per-capita economic growth has been lacklustre, the additional demand caused by this migrant influx has propelled New Zealand’s headline GDP growth rate to levels that are the envy of other developed nations. Against this backdrop, it was interesting to see the government announce policies that ultimately make it more difficult to migrate to New Zealand.
Nelson-Tasman’s economy grew quickly over the first half of 2016, with Infometrics’ provisional estimate of GDP showing growth in Nelson-Tasman of 4.4% over the June year, compared with estimated growth of 2.7% nationally. Infometrics Senior Economist Benje Patterson says “Several factors have contributed to this growth, including increasing levels of building activity, a growing population, better conditions for primary sector exporters, and soaring visitor numbers into the broader region.”
The Rio de Janeiro Olympics and Paralympics were a success for New Zealand, with a record number of medals being won by our talented athletes. At Infometrics, Brazil is always in the back of our minds, as one of our economists, David Kennedy, works remotely from a city called Belo Horizonte. We took the chance to chat with David as part of our regular feature “A day in the life of an Economist” to learn his take on the Brazilian economy and what he enjoys about living in Brazil and its rich culture.
It has been a bit of an unusual time recently in the banking sector following the Reserve Bank’s cut of the official cash rate by 25 basis points to 2.0%. Instead of playing ball and passing on this cut to mortgage holders and other borrowers, the major retail banks, with the notable exception of Kiwibank, passed on mere crumbs and, intriguingly, lifted the interest rates they offer to term depositors.
The upper North Island is due to dominate economic growth in New Zealand over the next five years. The relevant authorities need to ensure that there will be an adequate supply of skills to facilitate this growth. To understand these issues Infometrics was recently involved in a project that analysed the future labour force demands of key sectors in the upper North Island.
We were proud sponsors of the recent Victoria Business School Excellence Awards, where our Chief Economist, Adolf Stroombergen (pictured middle), presented Infometrics Economics Awards. This year’s winners were Saif Fawzi (left) and Jamie Hatch (right). We further celebrated these students’ success with a morning tea, where Benje Patterson took a moment to interview Jamie about what attracted him to economics and why it is important for us all to have a working knowledge of economics.
Bill English’s eighth Budget was a pretty boring event for policy and economic buffs out there, with an expanding economy ensuring growth in the overall tax take outstrips the lift in spending. National has long since set its ship on course, so the Budget was very much just a little tinkering around the edges. That being said, we did highlight a few issues we see specifically affecting our clients across the construction, transport, and education sectors, as well as in the regions.
The door remains open for the Reserve Bank to cut the official cash rate (OCR) again in June, with recent data showing that business cost pressures and inflation expectations remain subdued.
With capacity constraints in the commercial accommodation sector biting, it is time that private accommodation provision is embraced as part of solution to managing peak load in the tourism sector. This article quantifies the scale of the private accommodation resource and why the public sector is failing to take it seriously.