Welcome to the December 2024 Economic Bulletin.
We have two monthly features in this edition. In the first, we discuss what the Half Year Economic and Fiscal Update from Treasury and the Budget Policy Statement from the Minister of Finance tell us about the fiscal position and what to expect in 2025. The indicators show very clearly that the government’s strategy isn’t working. The Crown accounts are now much deeper in the red than they were when the coalition took office, and the economy remains in the doldrums. Yet the only plan appears to be a further round of cuts.
In the second feature, we examine some recently published research from the International Monetary Fund, which finds economic shocks that reduce standards of living shift people’s political preferences to the right of the spectrum – a finding holds across different countries, timespans, and political regimes. This research is relevant in the context of the twin macroeconomic shocks New Zealand has experienced in recent years – the “cost-of-living crisis” and the accompanying recession.
In our main data updates, we discuss the GDP data for the September quarter, which shows the New Zealand economy has rapidly deteriorated – the past two quarters have seen the steepest decline in GDP since the beginning of the 1991 recession. This demonstrates that the government’s approach of cutting public investment in a procyclical manner simply isn’t working. Rather than getting the New Zealand economy “back on track”, it is actively derailing it.
We also look at the balance of payments data and provide our regular monthly updates on prices, migration, and consumer and business confidence. Finally, we summarise the latest Crown accounts.
For breakdowns of the latest wage, benefit, and unemployment data, please see the October/November Bulletin.
Wishing you a very happy holidays.