NZ Economy: Caution Signs Ahead

The latest BusinessNZ Planning Forecast reveals a subdued 24 months of economic growth ahead, despite recent improved signs of activity.

The forecast for the September 2022 quarter shows there is still plenty of risk both at home and abroad, with inflationary and geopolitical pressures further hampering New Zealand’s future economic growth.

Internationally, the war in Ukraine is severely impacting European energy users who have been overly reliant on Russian supply, with cost pressures also arising from attempts to find alternatives.

BusinessNZ Chief Executive Kirk Hope says that in addition to concurrent risks to recovery, we are seeing the result of households tightening their belts in the face of rising living costs.

"Increasingly, consumers are experiencing inflationary pressure which is eating into disposable income. Higher interest rates are beginning to bite as more fixed rate mortgages come up for renegotiation."

The BusinessNZ Economic Conditions Index sits at three for the September 2022 quarter, up eight on the previous quarter and up nine on a year ago. The recent improvement coincides with belated moves to loosen up key factors holding the economy back, including border restrictions and most Covid-related restrictions including mask wearing now being scrapped. Labour supply issues also remain a major issue for most businesses.

The BusinessNZ Economic Conditions Index tracks 33 economic indicators including GDP, export volumes, commodity prices, inflation, debt, and business and consumer confidence.

The BusinessNZ Planning Forecast for the September 2022 quarter and more resources like it can be found at www.businessnz.org.nz

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