Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Westpac Economic Overview, May 2022 – The Right Amount Of Pressure

Westpac’s quarterly Economic Overview finds that economic growth is set to slow both in New Zealand and around the world, as central banks come to terms with what’s needed to bring inflation under control.

“The challenge the Reserve Bank faces is in applying the right amount of pressure,” says Westpac’s Acting Chief Economist Michael Gordon. “Too much, and it could inflict significant pain on household budgets and risk tipping the economy into recession. Too little, and inflationary forces could get out of hand, requiring an even more painful adjustment in the longer term.”

Westpac now expects the Official Cash Rate to reach a peak of 3.5% by the end of this year, from a previous forecast of 3.0%. “We expect that to include a series of 50 basis point increases in the coming months,” says Mr Gordon. “The Reserve Bank has recognised the value of early action to reduce the risk that even higher interest rates are needed in the future.”

Mr Gordon notes that higher mortgage rates are already working to cool down the housing market. In addition, higher debt servicing costs and the rising cost of living mean that households’ budgets have been significantly squeezed compared to a year ago.

This pressure is a necessary part of bringing demand in the economy down to more sustainable levels, says Mr Gordon. “We’re not talking recession, but we do expect some fairly lean growth in household spending in the year ahead, as other sectors such as international tourism take up the growth baton.”

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DoC: A Tale Of Two Halves For Rock Wren/Tuke
It’s a tale of two halves for rock wren/tuke with their fortunes hanging on effective predator control, the latest South Island-wide survey shows. The Department of Conservation monitoring programme, now in its third year, tracks populations of this small alpine bird... More>>


TradeMe: Wages Remain Hot While Job Listings Cool Off
Salaries are skyrocketing in the regions as Kiwi employers battle to attract staff and combat the rising cost of living, according to the analysis of over 77,000 vacancies listed on Trade Me Jobs for the quarter ending 30 June (Q2)... More>>



Tegel: Chicken Prices On The Rise But It’s Still The Favourite Protein For Kiwi Families

A combination of domestic and international factors is forcing New Zealand’s largest poultry supplier Tegel to raise its prices from July. The roughly 10% price rise is a result of ongoing cost pressures on the industry, including increases in labour... More>>



Motor Industry Association: New Vehicle Registrations Soften

The Motor Industry Association’s Mark Stockdale says that 12,049 registrations of new vehicles for the month of June shows the market is weakening in the face of raising costs of living... More>>



MYOB: New Data Shows Increase In SMEs Experiencing Stress And Anxiety

The lingering impacts of the COVID-19 pandemic have led to a surge in the number of local SME owners and operators experiencing stress and anxiety, according to new research from business management platform, MYOB... More>>



Carbonz: Cashing In On Carbon: The New Marketplace Helping Native Forest To Thrive

The country’s first voluntary carbon credit marketplace, Carbonz, is here to restore native biodiversity and help Aotearoa reach its carbon zero goals by selling the first carbon credits exclusively from native forest... More>>