Infometrics’ latest forecasts suggest there is little reason to be feeling more upbeat about New Zealand’s economic prospects, despite some improvement in confidence surveys over the last few months. The company expects growth to regain some momentum over the next year, but it believes nothing has changed to help the economy avoid mediocre results beyond 2021.
House prices rose almost 50% during the last decade over and above consumer price inflation. It would be brave to expect a repeat performance over the next 10 years, although we might have felt the same way looking at the market 10 years ago, after the 60% lift in real house prices during the 2000s.
New Zealand’s housing market isn’t functioning as well as it should be, with higher house prices, rising rents, falling home ownership, and a lack of housing options. But just how large is the housing shortage that we continually hear about?
The global economic slowdown will continue to be a drag on New Zealand’s economy over the next year, according to Infometrics’ latest forecasts. Escalating tariffs as a result of the trade war between the US and China have seen global growth expectations steadily downgraded. China, New Zealand’s largest export market and the major engine of the global economy over the last decade, is growing at its slowest rate in 30 years. All these factors mean that next year the world economy could record its slowest growth since 2012.
The latest Infometrics forecasts reinforce that New Zealand is expected to experience a period of softer growth over the next few years. With many businesses and boards currently reviewing their strategic plans and priorities for the coming years we thought it useful to briefly highlight some of the key current economic insights that decision makers need to be aware of.
Between September 1977 and March 1991, Japanese house prices rose 83% in real terms, or at an average real rate of 4.6%pa. Then things got ugly…
Households could go into their shells over the next year as economic conditions worsen, with little to support spending growth in the near-term, according to Infometrics’ latest economic forecasts. The stagnating labour market and the potential for house prices to fall both threaten to drag consumer confidence further below its long-term average.
Paul Barkle has been at Infometrics since 2017, juggling both work as an economist and study. Paul works across a wide range of areas at Infometrics and was involved with updating models in our forecasts that were released last week. This month we chat to Paul about a day in the life of an economist: how he came to be an economist and what he sees in the future.
New Zealand is at the mercy of international economic trends more than at any time since 2011, according to Infometrics’ latest economic forecasts. On the domestic front, net migration is slowing, the housing market has softened, and the tight labour market means that capacity pressures are inhibiting further growth.
New Zealand’s domestic economy remains in a similar position to where it was 12 months ago: prospects of middling growth, somewhat hampered by capacity constraints and a tight labour market, and with some of the most significant potential shifts being driven by government policy and rule changes. In contrast to this largely unchanged domestic picture, many question marks have appeared during the last year over the international economic environment.