We may not have a recession this year, but it will look like it, warns Infometrics

Research firm Infometrics says New Zealand could avoid a recession this year, but for most people the economy will feel like it’s contracting.

The imminent recovery in tourism was probably the only thing keeping economic growth in positive territory as Kiwi consumers retreated into their shells, he predicted.

Senior Economist Brad Olsen said households were under “massive pressure” from rising interest rates, a housing correction and inflationary pressure.

“We estimate that the average mortgage rate currently being paid by households has risen from 3% to 4.2% since August last year, but will climb to 5.7% by the second half of 2024, owners facing repricing at significantly higher rates,” he said. said.

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Infometrics predicts the economy will grow 2.8% this year, with tourism providing a “temporary and uneven rebound” in economic activity over the coming summer months.

By the end of 2024, Infometrics expects economic growth to have slowed to 1.6%.

Data from online jobs site Seek suggests that worries about an economic slowdown may finally be starting to have a dampening effect on the job market.

Job postings fell in June, Seek said, but remained well up from pre-pandemic levels.

Nicole Gourley / Stuff

Job postings fell in June, Seek said, but remained well up from pre-pandemic levels.

He said the number of job postings he advertised decreased by 3% from May to June and the number of applications per job increased by 5%.

National manager Rob Clark said the fall in job vacancies was the biggest fall in 10 months, but noted the number of adverts remained up 35% from pre-pandemic levels .

Seek and Trade Me are the two largest job boards in New Zealand, with Seek traditionally more represented in the white collar market and Trade Me in the blue.

Data released by Stats NZ on Thursday suggests consumer spending could breach its sustainable limit, ahead of another expected rise in the inflation rate, which could also mean worse times for the economy.

Stats NZ reported that Kiwis essentially stopped saving in the March quarter, when household disposable income rose 1.8% to $53.8 billion, but net savings fell at just $19 million, or less than 0.04% of that total.

Families were worse off in the quarter, he reported, with household net worth falling by $42 billion, or 1.7%, due to falling house prices and financial assets such as stock prices.

According to Infometrics economist Brad Olsen, the economy

MONIQUE FORD/Stuff

According to Infometrics economist Brad Olsen, the economy is “trying to do too much with too little”.

ANZ predicted that Stats NZ would report on Monday that annual inflation hit a 32-year high of 7.1% in the three months to the end of June, suggesting there would be no early end to the squeeze of the cost of living.

BNZ and Westpac are in the same ballpark, expecting annual inflation to be slightly higher than in the March quarter, at 7%.

Olsen said a wide imbalance between demand and supply needed to narrow before inflation was brought under control.

“The economy is trying to do too much with too little, and demand needs to come close to what the economy can supply, if we are to limit price increases to more manageable levels.”

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