ASB predicts steady economy through 2024

Advises patience for New Zealanders

ASB predicts steady economy through 2024

New Zealand’s economy is expected to maintain its current pace without significant growth in the next three to six months, according to ASB's latest Quarterly Economic Forecast.

“It’s a matter of continuing to hunker down a little longer until interest rates ease, and consumer spending gets more puff,” said Nick Tuffley (pictured above), ASB chief economist.

Inflation and interest rates

Despite a slow grind ahead, there are positive indicators on the horizon.

Inflation is anticipated to decrease gradually, with expectations it will fall below 3% by year-end, Tuffley said in a media release.

The report also suggested that the Reserve Bank may commence cutting the official cash rate in November, given inflation’s expected containment within the 1% to 3% target band.

Migration and rural industry optimism

New Zealand’s population growth is surging at a rate not seen since 1991, largely due to strong migration flows. The rural sector shows cautious optimism, buoyed by rising commodity prices and revised forecasts.

“Migration flows continue with population growth hitting an annual rate of nearly 3%, the strongest since 1991, and cautious optimism in the rural industry with prices for some key commodities having rebounded and forecasts having been nudged upwards,” Tuffley said.

Consumer spending trends

Despite economic steadiness, Kiwi households face challenges, with consumer spending on discretionary items like recreation and liquor decreasing.

“Kiwi households are still doing it tough,” Tuffley said.

Employment and global economic outlook

While employment levels have stagnated, the population increase poses additional challenges in the job market, ASB reported.

The global economic environment remains cautious, with some central banks expected to reduce interest rates later this year as inflation control measures begin to show effect.

“Overall, there are some bright spots in the outlook,” Tuffley said, but cautions that challenges persist for households and businesses through the rest of 2024.

Access the latest ASB Quarterly Economic Forecast here.

See LinkedIn post here.

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