reluctantly disagree<\/a>. \u201cGiven what is happening offshore, they\u2019re wrong,\u201d said the former National leader, as he gazes grimly out at Donald Trump, the Strait of Hormuz, Ukraine and fuel prices back rising, at jumpy bond markets, AI perils and a menacing El Nino.<\/p>\nIn a new episode of At Large with Toby Manhire, we asked Shamubeel Eaqub, chief economist at Simplicity, where he sits on this spectrum.<\/p>\n
Last week\u2019s measure of a 0.2% GDP increase in the quarter to June was good news, he said, insofar as it \u201cwasn\u2019t as bad as we had feared\u201d. That, and a figure for the year of 2.6%, \u201clooks healthy enough,\u201d he said, noting that was boosted on strong results before Trump decided to launch an attack on Iran. \u201cHigh oil prices pulled things back a bit, so it\u2019s still a bit of a question mark in terms of what happens in the second half of the year.\u201d<\/p>\n
Much of that question mark is cut out of the world map, and the ways that the weather \u2013 both economic and literal \u2013 impact on Aotearoa. Rising fuel prices bring inflation, which in turn could prompt further rises in the OCR. \u201cSo the Reserve Bank is raising interest rates and globally bond prices are rising \u2026 Both of those things mean that it\u2019s going to be more expensive for us to borrow money, whether we\u2019re households, businesses, or the government,\u201d said Eaqub.<\/p>\n
\u201cThese are still very much headwinds. So I\u2019d say the recovery from here is not plain sailing. There is a lot of underlying demand. There is still really good evidence that things are slowly knitting back together. But there are headwinds that you would not normally expect at this stage of the cycle.\u201d<\/p>\n
He added: \u201cGenerally, across the world, I think what we\u2019re seeing is this incredible pressure on governments to pay for defence, to pay for climate change \u2013 not to raise tax taxes, but increase spending. So there is a real fear around the world that you know these governments around the world are not prepared for a world that looks riskier, different, and they\u2019re still stuck on this path of borrow-and-spend.\u00a0<\/p>\n
\u201cBorrowing in and of itself is not a problem. But if you\u2019re borrowing money to essentially pay for the groceries, that\u2019s a problem. If you\u2019re borrowing money to build your infrastructure to buy your house, that\u2019s fine. Right now, lots of governments around the world, in the US and in New Zealand, we\u2019re borrowing money for our everyday expenses. So we\u2019re putting groceries on Afterpay, and that\u2019s why interest rates are going up.\u201d<\/p>\n
So where does that leave us \u2013 is the recovery under way?<\/p>\n
\u201cWhen I go around the country, people are just wanting to get started,\u201d said Eaqub. \u201cPeople have been waiting for a long time. A lot of things have been put on the side-burner. They want to do stuff. But at the same time, I hear the usual kind of refrain, you know, \u2018I\u2019m worried about interest rates. I\u2019m worried about the cost of fuel. I\u2019m worried about those other things. I\u2019m worried about the weather.\u2019 These things do matter.\u201d<\/p>\n
But, he added, \u201cthis recovery has been a long time coming. There is still a real kind of pent up demand for people to do things. So, I think, given the opportunity, this recovery will come. But it\u2019s very much those external conditions that still matter for a very small, open economy that has a large agrarian base.\u201d<\/p>\n
On At Large, Eaqub also delivers his assessment on the metric that towers above the others when it comes to the question of an economic bounce-back: the recovery mojo-meter.<\/p>\n
Elsewhere in the podcast, he discusses the proffered solutions from the rival parties for restructuring the supermarket duopoly, the prospects of an interest rate rise from the Reserve Bank a few days out from the election, and why the shifts in the US bond market sands matter to New Zealand.<\/p>\n","protected":false},"excerpt":{"rendered":"We ask Shamubeel.\u00a0 Economists and commentators across the country have their calculators out and their fingers in the…\n","protected":false},"author":2,"featured_media":607232,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[257142,138,27205,112585,111,139,69,135,299190],"class_list":["post-607231","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-at-large-with-toby-manhire","tag-business","tag-economic-recovery","tag-election-2026","tag-new-zealand","tag-newzealand","tag-nz","tag-politics","tag-shamubeel-eaqub"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/607231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=607231"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/607231\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/607232"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=607231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=607231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=607231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}