Markets, Mystics and Mayhem

We’re sitting down to talk about the current events in the Middle East. (And hope that nothing we say becomes (too) dated in the 48-hours it takes us to hit publish on the episode.) The main point of discussion being the move higher we’ve seen in wholesale rates recently. We reference an upcoming speech from Governor Breman throughout the episode which we’ve now heard and reflected on. And you can find our take on the speech here. But over all the speech emphasised the need to take time to assess. So immediate hikes (as priced in wholesale rates) are highly unlikely.

We also discuss a bit on last week's GDP numbers and the risks for growth ahead.

It’s not a special guest episode, but you will notice a new face this week. We welcome Alexandra to the kiwi economics team & podcast. And we look forward to her sharing some labour market expertise in future episodes.

Hosted by Jarrod Kerr, Sabrina Delgado, and Alexandra Turcu. Follow our economic commentary & insights ⁠here⁠.

Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

Bringing external guests onto our podcast always makes for some of the best conversations. And our chat with Dan Heyworth, owner and co-founder of Box Design and Build, was no exception. We’ve been wanting to get some more on the ground insights on all things housing and construction. And having Dan on the show was the perfect guest to unpack how the sector is really fairing, the challenges the industry is up against and some of the forces capable of shaping the future of design and construction in NZ.

What began as a modular and prefabrication venture to address housing affordability quickly revealed some limitations. Dan shares how he learnt firsthand of the flawed design systems and, more importantly, the lack of consistent pipelines that makes prefab and modular solutions largely impractical in New Zealand. But there are still solutions to reduce the cost of building Kiwi homes. It’s all about simplification and standardisation. Dan walks us through how pattern books could help unlock more affordable and frictionless building across the country.

What really stood out to us though was Dan’s assessment of the housing market and in turn the construction industry. We’ve been hopeful that the significant rate easing we’ve had over the past year would help bring some life back into both sectors. But it’s just not feeding through yet. As Dan puts it, the last couple of years have been quite rubbish. And things are still moving sideways. From what Dan is seeing on the ground, the recovery in construction is not one that’s coming in the next 6–9-months. But instead, much further out into 2027-2028.

And that’s just the start of this jam‑packed episode. We also reminisce about the Covid‑era surge in demand for Kiwi pools, discuss the state of construction costs, and touch on New Zealand’s severe lack of investment. Plus, we also cover the ongoing loss of Kiwi construction talent overseas, and the growing role of AI in the industry.
Hosted by Jarrod Kerr, and Sabrina Delgado.Follow our economic commentary & insights here: https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/commentary-insights/Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

We need to talk… about the war in the Middle East and the impacts on the global and Kiwi economy. Shipping traffic remains at a standstill at one of the world’s most strategically important oil choke points. And to no surprise, we’ve seen a massive spike in oil prices throughout the last week. With such disruptions, a near term lift in global and kiwi inflations is all but a done deal.But central banks are trained to look through near term noise. And what’s key here is that the downside risks to global and Kiwi growth majorly outweigh the upside inflation risks. We disagree with the talks of earlier rate hikes in response to such events. The weakening growth outlook simply matters more.Ultimately, we know that a rapid increase in oil prices acts like a tax on the consumer, simply straining weak household budgets further. And it’s not fair. The lift in petrol is going to hurt lower income households much more than higher income households. Meanwhile for many businesses, the conflict brings just another spanner in the works with a fresh wave of uncertainty. And under an already fragile demand environment, there will be pressure on margins as many businesses struggle to pass on higher costs. Hosted by Jarrod Kerr, and Sabrina Delgado.Follow our economic commentary & insights here: https://www.kiwibank.co.nz/business-b...Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

We’ve sat down to discuss all about the RBNZ’s latest Monetary Policy Statement. February’s meeting was the first of the year, and first for new Governor Anna Breman. And we have to say she did a great job in delivering a sensible, simple message. That being: The economy is in its early stages of recovery, settings need to remain accommodative, and inflation is going back to 2%. It’s our sentiments exactly.

And why are we sipping on sludgy instant coffee you may ask? Well, it was one of the findings in our latest Spending Tracker. Compared to last year, café visits were down in January. Interestingly, Kiwis opted for restaurants and bars over their local coffee spots this summer. Yet despite fewer café trips, total spending was actually up 9% on last year, meaning every visit is hitting the wallet a bit harder. So, for now, it seems we’re gritting our teeth through our homemade instant brews instead.

That was just one of the findings in our latest spending tracker. The overall theme was that while spending was robust in December, we saw quite a strong pull back in consumption in January. Households are still navigating a few headwinds before consumption can return to full strength. Overall adding to the fact that indeed the economy is still in its early stages of recovery.

Tune in for more insights on our take of the RBNZ and the market reaction that’s followed. Plus, more on Kiwi summer spending.

Hosted by Jarrod Kerr, and Sabrina Delgado.
Follow our economic commentary & insights here: https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/commentary-insights/
Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

It’s a bit of a mix and match episode this week. We start with discussing the ugly move higher across inflation expectations. Then switch to the latest stats on the PMI and PSI activity indicators. And later end up talking about one of, if not the biggest challenges facing the Kiwi economy: an aging population.

An aging population certainly isn’t a new problem. We even joke on the podcast about a note Jarrod wrote 10 years ago on the topic and how he could dust it off and change the publishing date to today and it would all still be perfectly relevant. More importantly though, an aging population is certainly not a future issue either. Treasury predicts that in just 5 years’ time, close to a quarter of all tax revenue will go to pensions alone if nothing changes. That’s a huge share of funding and takes away from other areas that badly need funding too.

Lifting the retirement age, increasing KiwiSaver contributions, and making them compulsory are all part of the toolkit to tackle the issue. But so is migration. It’s the fountain of youth as Jarrod first wrote ten years ago. So fittingly, we end with a chat about the latest migration figures and where to next from here.

PS: You can check out Jarrod’s demographic note from early 2017, which has truly stood the test of time, here: https://www.interest.co.nz/bonds/85722/cbas-director-interest-rate-strategy-says-demography-destiny-interest-rates-immigration
Hosted by Jarrod Kerr, and Sabrina Delgado.
Follow our economic commentary & insights here: https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/commentary-insights/
Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.