NZ back in recession

The New Zealand economy is officially back in recession, with a 0.1% decline in the December quarter, following a 0.3% decline in September. But the official data is only confirming what we already knew. People and businesses have shut their wallets, everything is falling in per capita terms, and the only thing that has been keeping up the headline is sky high population growth.

Even in high growth places like Queenstown and Rolleston, I have been having tough conversations. The reality is that GDP in places like Queenstown may be growing by 6%pa at a headline level, but that is being propped up by 8% population growth and so there is really a 2%pa decline on a per capita basis. If your business relies on volume you might be doing okay, but if your business has a thin margin you are struggling to protect then tough luck!

My speaking engagements over recent weeks have been slanted towards opening the eyes of local businesses to get themselves through the challenging short-term, without compromising on their long-term investment to be future fit. Businesses that invest in more efficient processes and evolve as customers’ behaviours change will be in a better position to thrive out the other side. Easier said than done, but maybe this is the year you should just accept that dividend cheque should be a bit lower and look to the long-term by maintaining investment rather than cutting corners.