NAB Morning Call Weekend Edition: The Tasman Divide
Oct 31, 2025
Doug Steele, a Senior economist specializing in New Zealand's macroeconomic trends, joins Gareth Spence, Head of Australian economics at NAB, to discuss the contrasting economic paths of their countries. Doug reveals New Zealand's ongoing recession, characterized by weak GDP growth and rising unemployment, while Gareth highlights Australia's population-driven economic resilience. They delve into labor market shifts, inflation risks, and the impact of monetary policies, alongside a nuanced discussion on productivity and central bank strategies.
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New Zealand's Rolling Recession
- New Zealand has endured a "rolling recession" with weak activity and real GDP per capita 5% below its 2022 peak.
- Doug Steele links the weakness to earlier heavy monetary tightening and a sharp slowdown in population growth.
Australia's Labour Market: Loosening, Not Collapsing
- Australia has seen unemployment creep up from a 2022 trough but remains lower than pre-pandemic norms.
- Gareth Spence says labour-market slack has grown modestly, not dramatically, so broad spare capacity is limited.
Export Gains Aren't Flowing Into NZ Demand
- Strong commodity prices have raised New Zealand's national income despite weak GDP growth.
- Doug Steele notes farmers largely saved and repaired balance sheets, so export income hasn't fully spurred domestic activity yet.