The Quarterly Economic Snapshot – 3 Key Takeaways for Business Owners

Our Quarterly Economic Forecast for February 2019 has been released, detailing the ways we expect New Zealand’s economy to regain its momentum after the soft second half of 2018. You can read the full report here, but below are a few key takeaways business owners should keep in mind over the coming months.

1.       Consider wage growth

2.       Asian consumer demand remains strong

3.       Ignore the noise

ASB Quarterly Economic Forecast Feb 2019 | 3 Key Takeaways

1.       Consider wage growth

The labour market has tightened. Construction and tourism have been struggling to find skilled and unskilled workers over the past year, but other industries like hospitality and retail might also be feeling the pinch. Couple that with increases to the minimum wage and we expect to see higher wage growth over 2019, as businesses look at ways of attracting and retaining talent.

To account for this, business owners may need to look for ways to rebalance their books elsewhere. It’s not always easy to just pass these added costs onto consumers, so finding opportunities to increase the efficiency of your labour and systems, or reducing excess spending could go a long way.

2.       Asian consumer demand remains strong

The Kiwi export sector continues to perform well and Chinese consumer demand remains key to our export performance. US and China trade tensions helped drive weaker growth outlook for China, one of our key trade partners, whilst our own political relationship with the country has made headlines recently.

Despite this, consumer demand and opportunity for exporters remains high both in China and other emerging markets in Asia. Beyond China, the following countries all offer opportunity in both the short and long term:

·         India

·         Thailand

·         Malaysia

·         Singapore

·         Indonesia

·         Vietnam

Indonesia, for example, is home to well over 260 million people and has strong income growth, over time. 

3.       Ignore the noise

What can often get lost in ever frequent news cycles, stories of low confidence and signs of global economic slowdown, is that New Zealand growth remains sturdy. We have strong underlying fundamentals including high Terms of Trade, low interest rates and the already mentioned wage growth. Understanding wider economic trends is good – it always pays to be informed – but only you know the key drivers of your business performance. Economic developments should be evaluated to ensure those with a direct impact are informing business decisions.

The above is just a snapshot of some the economic factors business owners should consider over the coming months. If you’d like greater detail into our forecast for the economy, click here to read the full report. If you’d like to receive regular updates and economic insights, you can sign up to our ongoing reports here.