Source: EMA
The Employers and Manufacturers Association (EMA) says news that the economy is in decline will be no surprise to the business community.
The Reserve Bank of New Zealand (RBNZ) reported today that GDP declined 0.2% in the June 2024 quarter.
“We know businesses are continuing to struggle,” says EMA Head of Advocacy Alan McDonald.
“Calls to our AdviceLine for assistance around restructuring and redundancy continue at comparatively high levels while the number of insolvencies for New Zealand companies in the second quarter of 2024 was the highest in eight years. Unemployment continues to tick up.”
Although GDP grew 0.1% in the first three months of the year, McDonald says it was no surprise to see a contraction in the latest quarter.
“Internal inflation remains stubbornly high, even with the OCR brake applied.
“We’ll have to wait for the next quarter to see if the recent RBNZ rate cut has a significant lasting impact on business confidence to start reinvesting.
“It was the first cut since March 2020, and provided some relief for businesses, but that will take a while to filter through the economy.”
While the latest GDP figures showed some recovery in the manufacturing sector, the latest BNZ-BusinessNZ Performance of Manufacturing Index shows the sector has now been in contraction for 18 consecutive months.
“There’s no doubt that current conditions remain challenging,” says McDonald.
“Longer-term proposals around how we do consents and deliver infrastructure will provide stimulus, but in the meantime, we could look at changes such as accelerated depreciation and freeing up conditions around overseas direct investment as ways to stimulate shorter-term investments to increase productivity and access necessary capital.
“While it’s on the Government’s radar, we still don’t have our skilled migrant settings right, with shortages of skilled people to train up our next generation of tradies and technicians.
“That also hastens the need to get our training systems back on track after the disruption and failure of Te Pūkenga with a number of apprenticeship programmes struggling to deliver.
“In the meantime, many small businesses are just looking to where their next orders are coming from, so they can keep their staff and businesses in work.”
