NZ economic growth was a ‘pig in a python’ and temporary, UK economist says
Wednesday, 8 April 2026
A visiting British economist says New Zealand’s much vaunted “green shoots of growth” at the end of last year was not real growth but a “pig in a python” ‒ a temporary injection of cash into the economy.
And he says without real growth, New Zealand will fare badly from the oil supply shock that is about to hit.
Andrew Hunt is a UK-based independent economist and investment strategist who frequently provides macro-economic analysis on New Zealand through his firm, Andrew Hunt Economics Ltd, and in partnership with Amova Asset Management. Hunt was in the country last week to speak at Amova’s annual summit, where he presented a dystopian outlook for the country.
The comments were made prior to today’s two-week “ceasefire” between Iran and the US.
Hunt told the conference he “wasn't a big believer in New Zealand’s economic recovery story.
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“There was what economists like to call the ‘pig in the python’ effect ‒ a surge in capital inflows in the third quarter … perhaps something to do with the Fonterra deal, or more likely, the visa scheme that brought in a lot of capital … and you had this surge of liquidity that went through the economy, and rippled through the property market, caused a bit more spending, and the economy showed some growth.”
The GDP figure showed a 0.9% increase in September 2025, which had dropped to 0.2% by December 2025, and showed few signs of continuing, he said, especially given the oil price shock in play since the war on Iran started at the end of February.
“Next quarter, we will probably get the oil supply shock. So I think New Zealand will struggle to grow in that environment,” Hunt said. “It’s a big ‘terms of trade’ shock to this country, [although] currency acts as a buffer.”
The New Zealand dollar was trading about US$0.5692 on Tuesday, near a four-month low due to intensifying geopolitical conflict in the Middle East and a cautious domestic economic outlook. A cheap currency helps exporters, acting as a competitive subsidy, though it also causes higher import costs.
Oil
Hunt said in a couple of months the energy disruption would hit high gear. Currently disruption was confined mainly to adjacent sectors using oil-derived componentry, including chemicals, PVC materials and semi-conductors.
With an oil shock - a transfer of spending power to oil producers - an economic slowdown was on the cards and a recession highly likely, with prices continuing to rise. He said while many global central banks would “talk tough” - using aggressive language to signal that they will raise interest rates or keep them high for longer to combat inflation - they’d likely end up cutting rates.
“I think a great template is to go back to New Zealand in the first Gulf War [1990-91] - the RBNZ initially raised rates because inflation went up, the economy fell over, and they ended up cutting rates aggressively,” Hunt said, adding the Gulf war and oil shocks of 1973 and 1979 were more relevant to what was happening now than some of the oil price spikes the world has had in the last 10-15 year, which “weren’t supply disruptions, just higher prices… you could still get oil.”
“In a couple of months time, not imminently, there will be supply shortages. The world will get poorer, and central banks, I think, will respond to that by cutting short term rates.”
Capital
Predicting what would happen in the longer term was tougher, he said. More defence spending, slower economies, lower tax receipts, more government spending, weaker growth and a lot of borrowing by companies as economies slow were all possible.
“I think that the casting vote in this is actually going to be what happens to international capital flows,” Hunt said.
And a lot of what might happen worldwide hinges on China, “which has become the arbiter of global liquidity,” he said.
Historically, China has been a price setter in global goods, and has also exported inflation, using considerable reserves of public and private money around the world, and where that has been done, driving up prices (i.e. in the Auckland housing market). It is estimated for example the Chinese private sector has about US$5 trillion invested in foreign assets (property, land, businesses and other classes), much of it unaccounted for.
Its foreign exchange reserves measure another almost US$4 trillion.
But China has had a highly problematic property bust, with property prices falling and consumers pulling back from spending in favour of paying off debt and saving. The private sector’s ability to be loaned money is constrained, while its non-price-sensitive central bank is snapping up government bonds of other countries - a declining but still substantial number of US treasuries as well as other countries - with one aim: holding the Chinese currency down, and creating liquidity in other people's markets.
But this could change if China allowed its yuan to appreciate significantly. The price of many goods for consumers in other countries would rise, there would be a reduced demand for US government bonds, and the yuan’s status as a global reserve currency would encourage its use in international trade settlement, challenging the dominance of the US dollar.
Less capital flowing out of China could have highly significant impacts, as had happened throughout history, Hunt said. When British money stopped flowing in the late 17th century, Dutch military and economic power waned; the British financial crisis of 1931 elongated the worldwide economic downturn, including reducing US money flowing to Europe, causing war and devastation. Hunt warned those interested in the global economy - which exerts an enormous influence on happenings in New Zealand - to keep an eye on what China was doing with its money.
“If the People's Bank of China stopped doing US$100 billion of foreign exchange intervention a month, if it stopped recycling China's current account surplus, then we're into a different world”.