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Business Times
3 days ago
- Business
- Business Times
New Zealand's economic recovery gathers pace as exports jump
[WELLINGTON] New Zealand's economic recovery from a 2024 recession gathered pace in the first quarter as the central bank lowered interest rates and exports surged. Gross domestic product rose 0.8 per cent in the three months to March, accelerating from a downwardly revised 0.5 per cent growth in the fourth quarter, Statistics New Zealand said on Thursday (Jun 19) in Wellington. The result was slightly better than the 0.7 per cent growth expected by economists. While the economy is still smaller than it was a year ago, its recovery will be welcomed by the government as it makes growth a key priority ahead of a 2026 election. That ambition is being tested by the uncertainty arising from global trade tensions, which is damping spending and investment and raising concerns that the expansion may weaken. 'Repair of the economy is underway but significant risks are apparent,' said Nick Tuffley, chief economist at ASB Bank in Auckland. 'Data since March suggest a sizeable deceleration in economic activity. Geopolitical deterioration in the Middle East presents upside risks to inflation and therefore pricing behaviour.' The New Zealand dollar was little changed after the GDP report, buying 60.29 US cents at 11.30 am in Wellington. The yield on two-year government bonds rose two basis points to 3.44 per cent. RBNZ easing Buoying the economy, farm production improved in the quarter while food manufacturing also lifted, the statistics agency said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Taken together with high global commodity prices, that has seen a boost to rural incomes and growth in the regions, even as the cities have been encumbered by a sluggish housing market and cautious consumers. Lower interest rates are expected to underpin steady growth in 2025 even as the Reserve Bank of New Zealand (RBNZ) hints it may be nearing the end of its easing cycle. The central bank has cut the Official Cash Rate (OCR) aggressively, reducing the benchmark by 225 basis points since August to 3.25 per cent. Still, last month it removed an explicit easing bias ahead of its July decision. Investors no longer see much chance of the OCR falling below 3 per cent this year, swaps data show. 'With the economy regaining its footing sooner than expected after last year's sharp downturn, we continue to expect that the RBNZ will take the opportunity to pause and assess the situation at its July OCR review,' said Michael Gordon, senior economist at Westpac in Auckland. Growth was stronger than the 0.4 per cent that both the RBNZ and the Treasury Department forecast. Treasury Chief Economist Dominick Stephens yesterday said that while recent data has been weak, he still expects growth to pick up in 2025. From a year earlier, GDP fell 0.7 per cent, which was less than economists' estimated 0.8 per cent decline. Still, the annual GDP contraction in the fourth quarter was revised to 1.3 per cent from 1.1 per cent. Key drivers of the first-quarter expansion were farming and manufacturing, today's report showed. Manufacturing grew 2.4 per cent and goods exports increased 3.6 per cent, led by primary products. Tourism fell. GDP per capita rose 0.5 per cent from the fourth quarter, its second straight gain after more than two years of decline. BLOOMBERG
NZ Herald
7 days ago
- Business
- NZ Herald
Reserve Bank blocks media from talk by OCR committee member Prasanna Gai
Professor Prasanna Gai is a member of the Reserve Bank's Monetary Policy Committee. The Reserve Bank's commitment to transparency is being called into question again – this time because it blocked media from attending a talk by a member of the powerful committee that sets the Official Cash Rate. Prasanna Gai talked to a group who paid to attend an Auckland Chamber of
NZ Herald
13-06-2025
- Business
- NZ Herald
Kiwibank economists: More Official Cash Rate cuts needed amid slow recovery, global risks
Kiwibank economists are calling for more cuts to the Official Cash Rate as the economy continues to crawl out of a 'deep, deep hole', and as trade tensions and slowing demand offshore hit 'just as confidence begins to lift'. Economists at the state-owned bank released their Bi-Annual Outlook Note this
The Star
12-06-2025
- Business
- The Star
Closed-door RBNZ talk raises transparency concerns
WELLINGTON: An external member of the Reserve Bank of New Zealand's (RBNZ) Monetary Policy Committee (MPC) will be giving a rare presentation, but it will be behind closed doors. Prasanna Gai will speak at the Auckland Business Chamber on the topic of 'Monetary Policy and Trade Uncertainty.' It is an 'exclusive lunch gathering' where Gai will 'share his expert insights on interest rates,' according to the chamber's website. There will be a question-and-answer session after his speech, an RBNZ spokesman said. However, the event is closed to the media, will not be live-streamed and no speech notes will be published. 'There is no obligation for presentations by MPC members to be public or open to the media. That is up to MPC members to decide,' the spokesman said. Gai's remarks will be based on the May Monetary Policy Statement, 'so will not include any new information,' he said. Gai declined Bloomberg's request for an interview. His presentation follows a split on the MPC over whether to cut interest rates at the May 28 meeting, with one unidentified member voting to hold the Official Cash Rate (OCR) at 3.5% and the remaining five electing to lower it to 3.25%. The dissenting vote was one of the factors that prompted financial markets to reduce bets on the OCR falling below 3% this year. 'On one hand it's quite encouraging to have an external member of the MPC speaking,' said Brad Olsen, chief executive and principal economist at consultancy Infometrics. 'But having an external speak to a closed audience that not everyone can go to and there aren't any speech notes, you do start to worry a little bit. 'What sort of information is going to be highlighted there that might be said off the cuff, spur of the moment, that gives you a bit more insight into what's coming next?' Fund manager Simplicity chief economist Shamubeel Eaqub has sympathy for RBNZ policymakers speaking at private events because unfiltered access builds trust in the institution, but he thinks live-streaming the speech or publishing a recording afterwards would aid transparency. 'This whole limiting access thing is a problem,' he said. — Bloomberg
NZ Herald
12-06-2025
- Business
- NZ Herald
Westpac lowers fixed home loan rates after OCR drop
The last big New Zealand bank has dropped its fixed home loan rates after the latest Official Cash Rate cut. Westpac announced changes to its six-month and one-year rates today, effective from tomorrow, Friday. Its six-month rate dropped 20 basis points and the one-year rate dropped six basis points. The
