Priority One Economic Outlook – Quarter Three, 2023
In the Quarter Three, 2023 Priority One Economic Outlook, Priority One Chief Executive, Nigel Tutt, sits down with Jarrod Kerr, Chief Economist at Kiwibank, to explore New Zealand’s economic landscape, offering perspective and insights into New Zealand’s economic challenges and opportunities, with a particular focus on Tauranga and the Western Bay
Jarrod Kerr provides a brief economic overview for Tauranga and the Western Bay, covering global and local factors. Highlighting the impact of rising interest rates and challenges in China, he discusses New Zealand’s specific issues—weather disruptions, housing corrections, and a cost-of-living crisis — describing the current state as “awkward.” Despite challenges, Kerr maintains optimism, foreseeing a turnaround soon, influenced by potential interest rate adjustments from the Reserve Bank.
The discussion shifts to the real estate sector, acknowledging a market bottom earlier in the year. Jarrod notes a shift in market psychology from pessimism to optimism, citing increased housing supply and renewed demand. Signs of a housing market recovery are observed, offering hope for improved activity in the coming months.
Jarrod addresses the surge in migration, emphasising its record scale of 150,000 migrants in the past year. He highlights the dual impact on housing demand and the labour market, shedding light on the shift in business concerns from labour shortages to future revenue worries.
The focus turns to the national unemployment rate, which had reached a low point but is expected to gradually increase to around 5.5%. Jarrod provides an optimistic outlook, characterising this shift as a soft, shallow landing without a significant spike in unemployment.
Jarrod delves into post-election scenarios, revealing businesses’ desire for change and a more business-friendly environment. He notes the anticipation of positive shifts, especially among small to medium enterprises, and hopes for increased household confidence and housing market activity with potential policy adjustments.
Exploring long-term opportunities, Jarrod emphasises the significance of retaining focus on New Zealand’s strengths, including agriculture and tourism. He expresses excitement about technological advancements, particularly in AI, encouraging their integration to enhance existing sectors.
The interview concludes on an optimistic note, touching on the positive impact that good weather conditions have on economic activity – both hoping for a warm and (not too) dry summer, as we head into the Christmas and New Year’s holidays.