Government defends economic record as NZ heads back into recession

Thursday, 19 December 2024

Finance Minister Nicola Willis is defending her Government’s economic record.

The blame game has started as New Zealand finds out it will be in recession for Christmas.

The Government is defending its economic record, while the opposition says things are worse because of their policies.

The GDP dip represented the weakest six month period for New Zealand’s economy since 1991, excluding during the Covid-19 pandemic.

The Government is defending its economic record, while the opposition says their policies are to blame for New Zealand returning to a recession.

Economic activity declined again in the three months to September, with GDP falling by 1%. This follows a 1.1% decline in the June quarter.

The dip represented the weakest six month period for New Zealand’s economy since 1991, excluding during the Covid-19 pandemic.

15 economists have written an open letter to the Govt saying: 'Fiscal policy is needlessly exacerbating the current recession'.

Despite the grim reading, Finance Minister Nicola Willis defended the latest economic figures, saying the Government has taken steps to restore respect for taxpayers’ money and drive economic growth.

“These figures highlight the importance of getting the Government’s finances back on an even keel and creating an economy that provides opportunity for everybody.

“New Zealanders have now experienced eight quarters of negative growth on a per head basis.

“The decline reflects the impact of high inflation on the economy. That led the Reserve Bank to engineer a recession which has stifled growth,” Willis said.

Barbara Edmonds says New Zealand has more debt under Nicola Willis.

She added that with inflation now under control and growth set to revive, New Zealanders can look forward to brighter prospects next year.

This optimism was not shared by the Labour party, however, with their finance spokesperson Barbara Edmonds saying Willis has taken the country deeper into a recession.

Edmonds said that the Finance Minister’s cuts and austerity had fed the “recessionary fire”.

ACT leader David Seymour says it is Labour’s fault New Zealand is in recession.

“There’s no creative accounting that Nicola can do to make these GDP figures better.” Edmonds said.

“A year on and we are in no better position. The economy has not grown, Kiwis are no better off, and even more are out of work.”

Edmonds added that New Zealand has more debt and nothing to show for it and that Willis needed to focus on getting results in the “real world”.

It has been a bad week for the state of the economy.

Meanwhile, ACT leader David Seymour blamed Labour for the drop in GDP, saying his party was ringing alarm bells over what he called their “spending binge” throughout the previous term.

Seymour said the recession was vindication of what they had said, but that the Government had been making steps to turn things around.

“A new Government has made a good start in reining in waste, but we need the nerve to stay the course and keep winding back programmes that aren’t making the country richer.”

However, CTU economist, Craig Renney, says the economic situation is 'worse than thought”, saying there will be more hardship for workers heading into Christmas.

Renney said this wasn’t a wake-up call for the Government, but an alarm. “We have just had a budget where the Government’s fiscal plans have clearly been shown to have failed. Unemployment is rising – and will likely rise more.”

“The economy is now showing the impact of the Government’s policies – it’s been in office for a year. It’s clear that it’s time for a new approach, or we will all suffer the devastating economic consequences,” Renney said.

The news that New Zealand has returned to a recession comes off the back of Treasury’s Half Year Economic and Fiscal Update which painted a tougher economic picture than expected.

The update showed debt was expected to grow and a government surplus will remain out of reach until 2029.