Cameron Bagrie says Buckle Up!

NZ Economy update February 2020

Uncertainty is high and businesses need to be on their toes according to Cameron Bagrie from Bagrie Economics, and formerly Chief Economist at ANZ.

On many levels the economy looks in good shape.  Migrants continue to flock in.  House prices are up.  Unemployment is so low that getting skilled staff is a major problem.  Commodity prices are buoyant.  There are orange cones everywhere.  The government is pushing money into the economy and interest rates are not just they, they are incredibly so.

Of course beauty is only skin deep.  There are concerns we need to acknowledge.  NZ is tied to China and the outlook for China is dicey.  Coronavirus risks bringing the global economy to a standstill.  The government might be spending money but is it quality spend?  House prices are up, but that just creates a bigger affordability problem.  The dairy sector (NZ’s 2nd largest export earner) is down in the dumps and drought conditions are exacerbating pressure in some regions.  Our number one export earner – tourism – will likely shrink in 2020.  Some huge changes are taking place in the banking sector in regard to their appetites to lend, especially in agriculture. 

NZ looks reasonably well placed according to Cameron, but we should still “buckle up” because the next couple of years look set to be volatile.