GDP outlook slashed as fresh cost-of-living shock arrives

The Kākā by Bernard Hickey

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GDP outlook slashed as fresh cost-of-living shock arrives

ANZ cuts Q2 GDP forecast to 0.1% from 0.4% & sees just 0.9% growth for 2025 as leading indicators sag; Iran attacks Qatar & may close Straits of Hormuz; Oil jumps over US$80/bbl; Petrol may rise 30c/l

Bernard Hickey

Jun 23, 2025

133

Transcript

Briefly in the news from Aotearoa’s political economy around housing, poverty and climate on Tuesday, June 24:

ANZ economists have slashed their June quarter GDP growth forecast to 0.1% from 0.4% after a range of leading indicators sagged in June, and just ahead of another cost-of-living shock from an oil price surge as Iran finally attacked US bases in the Gulf states overnight. See more in The Lead below the paywall fold.
The Government hopes that higher export receipts from record high dairy and meat prices will flow through into economic growth through consumer spending and farm investment, but banks report farmers are using the extra cash to pay off debt and are buying new tractors at the slowest rate in 24 years. See more in the Number of the day below.
Donald Trump called Vladimir Putin “THE BOSS” in a post overnight referring to comments attributed to Putin about offering to send nuclear weapons to Iran. See more in Quote of the day below.
The monthly average tractor purchases over the last year to the end of April has been 160, the lowest since 2001, BNZ reports. See more in Number of the day below.
Fresh data from Auckland Council shows just 50% of building consents actually start being built within six months of the consent, suggesting a further lag in housing construction spending through 2024 and 2025 as many consents remain stalled without buyers or finance at prices builders and developers think make sense. See more in Table of the day below.
Today’s Must-Read is an Op-Ed from Anne Salmond via Newsroom on “a lame but personally intimidating campaign launched by Deputy Prime Minister David Seymour against academic critics of his Regulatory Standards Bill.”

There’s more detail and analysis for paying subscribers below the fold and in the podcast above. If we get over 100 likes I will open it up in full for public reading, listening and sharing.

The Lead: GDP stalls just as new cost shock hits

ANZ has slashed its forecast for GDP growth in the June quarter to just 0.1% from 0.4% after a slump in leading indicators in June. It sees growth averaging just 0.9% for the 2025 year, despite the Government’s hopes for a ‘growth, growth, growth’ pickup linked to lower interest rates.

Instead, a balance sheet recession linked to the high interest rates in 2022, 2023 and 2024 a house price slump expected to extend to 2030 has stalled spending and investment, just as the Government itself froze investment and chose debt reduction over stimulus, despite its ‘growth, growth, growth’ rhetoric.

The forecast of a new winter of stagnation comes just as a new cost-of-living shock arrives courtesy of higher petrol prices, possibly as much as 30 cents a litre higher in coming days, as Iran attacked US bases in the Gulf States and threatened to close the Straits of Hormuz, through which a quarter of the world’s oil supplies pass.

Quote of the day:

“Did I hear Former President Medvedev, from Russia, casually throwing around the "N word" (Nuclear!), and saying that he and other Countries would supply Nuclear Warheads to Iran? Did he really say that or, is it just a figment of my imagination? If he did say that, and, if confirmed, please let me know, IMMEDIATELY. The "N word" should not be treated so casually. I guess that's why Putin's "THE BOSS.". Donald Trump in a Truth Social post overnight.

Number of the day: Repaying debt first

Despite record high payouts and export receipts, farmers are repaying debt first, rather than spending or investing, as demonstrated by the average tractor purchases per month in the year April falling to 160, its lowest since 2001, BNZ reported in its weekly note yesterday, with this chart, albeit noting a pickup in late May and June after Fieldays and the Government’s investment boost.