22 September 2022
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Labour shortages The outlook for growth in the New Zealand economy is challenging for a variety of reasons listed here a few weeks ago. Factors in play include the following. • •
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Supply chain disruptions which are likely to continue because of China’s failure to vaccinate its population against Covid-19. A very weak growth outlook for China’s economy as a result of drought, the substantial fall in property prices and construction, deteriorating trade relations with the United States, decreasing orders for goods from other economies as they weaken, and the shutdowns of cities, factories, ports etc. to fight Covid-19. A weak growth outlook and potential recession for the US economy as the Fed. fights inflation. Probable recessions in the UK and European Union due to tight monetary policies and soaring energy prices caused by Russia’s invasion of Ukraine.
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A retreat from record low interest rates here as our central bank fights against inflation. Retailers being hit by the ending of a two and a half year consumer spending binge on items like spas, kayaks, home renovations etc. Diversion of spending towards travel overseas. Falling housing paper wealth with average prices now 12% down from their peak and still falling. Falling house construction as the myriad of problems hitting the sector cause buyers to back off and switch back to looking at listings of existing dwellings. A 7.3% hike in the cost of living for the average Kiwi household over the past year. Reduced availability of credit to consumers. Net negative migration flows which are likely to continue through 2023 and 2024 following a net loss of over 12,000 people in the past year.