Data out in the last week showed the amount Kiwis are saving is in decline.
Savings fell to $653 million in the March 2023 quarter, an $874m decline from the December 2022 quarter’s $1.5b, according to Stats NZ.
These numbers are concerning during a tough economic period when families will be expected to dig a little deeper to get through.
Speaking to The Front Page podcast, NZ Herald Business Editor at Large Liam Dann said that while he expected savings to drop, the reason behind the decline caught him off-guard.
“I thought our savings rates would be down because of the high cost of living, but then I read through the release from Stats NZ and they found that the biggest drivers in increased spending for Kiwis were things like increased travel,” says Dann.
Despite the recessionary pressure on the economy, Dann says there are still many people doing well. But these good times won’t last for everyone.
“The real tough part in the recession will come later in the year,” says Dann, pointing out that many Kiwis are yet to shift to the higher mortgage rates.
“About half of mortgage holders still need to refix because the bulk of people are on a two-year fixed mortgage. So a lot more people are going to feel that big bump. And for those people who have already come across, it becomes almost like a war of attrition. You could pay 7 per cent for a while, but it really starts to hurt over time.”
As these economic effects take hold, we are also likely to see an increased number of job cuts in the coming year.
“The estimates are that we head up to about 5.3 or maybe 5.5 per cent unemployment, which would take us back to historically normal levels for the last decade or so. But it does mean we’re looking at around an extra 150,000 people registered unemployed. And that’s the pain the economy we haven’t seen.”
Listen to the full episode of The Front Page podcast for full chat on these pressing economic concerns.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
Financial Times: ‘Sewage prioritised' in decline of X as freelancers flee the platform.