Gareth Kiernan (Infometrics Chief Forecaster) chats to Liam Dann, of NZ Herald Economy Hub, about the expected economic slowdown over the next few years.
A range of factors have combined to drive the slowdown, many of which can be sheeted back to government policy.
Election 2017 saw some high-profile and costly spending promises by all three parties now in government, and expectations are high for more cash in the upcoming budget. Finance Minister Grant Robertson will lay out his spending plan on May 17, with a mixture of red, black, and green anticipated.
Transport funding and how much we’ll all pay at the pump has been all the (road) rage recently. In late March, the government introduced legislation to allow Auckland Council to implement a regional fuel tax, and in early April the Government Policy Statement on Land Transport was published, signalling a 3-4c/l annual increase to petrol prices nationally.
The prediction by Winston Peters of an economic correction or slowdown, made at the time of last October’s coalition announcement, appears to be coming true. Infometrics’ latest forecasts see New Zealand’s economic growth slowing to 2.4%pa by the end of this year and slipping below 2.0%pa during 2019.
We have heard a lot recently about the struggles to meet labour demand in the regions . With a tight labour market and low unemployment rate, stories of employers being unable to find enough workers are becoming increasingly common. This article looks at immigration, one of the key ‘cogs’ to helping address skills shortages. More specifically, we look at how the proposed ‘Regional Skills Shortage List’ could provide the necessary workers throughout the country.
Since Labour came into power late last year, its KiwiBuild policy has been shrouded in confusion by contradictory statements from government departments and within the government itself about exactly what the policy means for the construction sector. Phil Twyford, the Minister for Housing and Urban Development, has been adamant that “the overwhelming effect of the KiwiBuild plan will be to deliver new houses over and above what the private market is delivering.” He has been quick to downplay the possible crowding out of private sector work. Furthermore, the government had indicated that part of the policy was to buy some properties “off the plan”, yet Mr Twyford had seemingly contradicted this statement continually reiterated that KiwiBuild would result in an additional 10,000 dwellings being built per year over and above what the market would otherwise have delivered.
I have been talking a lot lately (wait for it) about whether we have the infrastructure for a large electric vehicle fleet. The main worry is that countries don’t have the infrastructure to charge up an entire fleet of electric vehicles, so I thought I’d figure out exactly how many EVs the New Zealand grid can handle.
Residential construction in Auckland accounted for almost a quarter of all nationwide building activity during 2017, with Auckland’s non-residential construction taking that share up to 38%. So it’s little surprise that the region’s prospects dominate industry commentary.
We have recently conducted a survey of local councils across the country to gauge how optimistic they are about the employment outlook for their area. The survey asked people involved with economic development in councils about their perceptions of employment growth prospects in their area over the next one and four years.
Economic growth during 2018 is set to fall short of previous expectations, according to Infometrics’ latest forecasts. Infometrics sees economic growth slowing from 3.0%pa currently to 2.6%pa in early 2019, contrasting with the forecaster’s previous expectation of accelerating growth during 2018.
“Labour capacity constraints in the residential construction sector, changes in central government’s infrastructure priorities, and slightly disappointing dairy prices will all weigh on growth this year,” says Infometrics Chief Forecaster Gareth Kiernan.