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Sabrina Delgado: Kiwibank economist predicts economic growth for 2026 · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk SEDB. Follow
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  Speaker 2: Well, we've all been surviving twenty five, but brighter days
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  Speaker 2: of forecast. The twenty twenty six kee we Bank has
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  Speaker 2: released its economic outlook and is tipping a robust recovery,
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  Speaker 2: with suggestions the economy has turned a corner. Keep Wei
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  Speaker 2: Bank economist Sabrina Delgado joins me. Now, Sabrina, good morning.
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  Speaker 3: Good morning.
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  Speaker 2: This is a pretty upbeat report from you. You say
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  Speaker 2: we are seeing signs of recovery across the board.
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  Speaker 3: Oh. Absolutely, We're pretty excited going into next year. We're
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  Speaker 3: looking forward to quite a broad based recovery, especially after
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  Speaker 3: this year. You know, it was a frustrating year for many.
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  Speaker 3: We did expect a recovery to sort of start taking
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  Speaker 3: place in twenty twenty five this time last year. It
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  Speaker 3: took some hits and had some delays, and it's just
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  Speaker 3: now that we're starting to see that the signs of
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  Speaker 3: recovery has sort of taken foot. And I mean, it's
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  Speaker 3: great that we're finally here, and it's really all to
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  Speaker 3: do with the fact that we've got the right settings. Now,
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  Speaker 3: interest rates you know, they are at levels that are
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  Speaker 3: finally encouraging activity that matters, and it's having an impact
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  Speaker 3: the signs we're saying. You know, we've got consumption lifting
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  Speaker 3: business confidence as the firmer, the jobs market is stabilizing,
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  Speaker 3: We're seeing some activity in the housing market, so the
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  Speaker 3: recovery is underway now and you know, we think will
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  Speaker 3: gather pace into twenty twenty six for a much better year.
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  Speaker 2: Okay, so that's why things are looking brighter. Where are
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  Speaker 2: we seeing shifts at the moment.
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  Speaker 3: In particular, definitely across consumption. You know, we've been looking
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  Speaker 3: at some of our own Kiwibank card data. We've seen
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  Speaker 3: that consumers they're signed to spend more on some of
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  Speaker 3: those funner discretionary items. That's a good sign and consumer confidence.
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  Speaker 3: They're also starting to spend more on your big ticket items,
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  Speaker 3: particularly around housing related spending. So that usually tends to
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  Speaker 3: tick point to maybe a bit of a pickup in
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  Speaker 3: the housing market too. You know, if people are out
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  Speaker 3: buying new furniture or even buying some paint, they're either
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  Speaker 3: you know, maybe looking to it's moving homes or putting
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  Speaker 3: their house back on the market. So it's all pretty
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  Speaker 3: positive there.
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  Speaker 2: Love hearing about the uptick, love hearing that things feel like,
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  Speaker 2: you know, the bell curve is kind of on a
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  Speaker 2: it's heading in a different direction and things. It's really interesting,
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  Speaker 2: isn't it. Because then I go and talk to someone,
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  Speaker 2: you know, who is a very big retailer, who says
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  Speaker 2: to me, oh, it's still really tight. People aren't shopping.
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  Speaker 2: You know, it's hard to kind of get a gauge
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  Speaker 2: on it, but it does. It feels like it's moving
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  Speaker 2: in the right direction, but it's quite slow. Would that
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  Speaker 2: be fair to say.
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  Speaker 3: Yeah, we're still at the beginning of the recovery now.
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  Speaker 3: You know, it wasn't until a couple of months ago
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  Speaker 3: that we actually thought interest rate settings move into levels
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  Speaker 3: that actually do encourage activity. We were more at neutral
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  Speaker 3: settings before. So it will take some time for that
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  Speaker 3: path through to continue. We still have around thirty percent
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  Speaker 3: of you know, the mortgaged households to roll onto lower
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  Speaker 3: rates as well in the coming six months, so there
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  Speaker 3: is still a path through effect that will take time,
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  Speaker 3: but we are starting to see those signs that Okay,
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  Speaker 3: there's sign of life here. The recovery is going to
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  Speaker 3: take place now.
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  Speaker 2: Signs of life I love it. We've seen long term
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  Speaker 2: interest rate rises this week. What you expect in twenty
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  Speaker 2: twenty six on that front.
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  Speaker 3: Yeah, ultimately it's a little bit annoying and I guess
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  Speaker 3: it premature to be seeing these financial conditions tightening. And
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  Speaker 3: it's a little bit frustrating because it comes from a
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  Speaker 3: bit of a misstep from the Reserve Bank. You know,
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  Speaker 3: following their last meetings, they sort of signaled that they
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  Speaker 3: were done cutting completely and it encouraged traders to price
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  Speaker 3: the rate hikes into next year. For us, you know,
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  Speaker 3: rate hikes are still a twenty twenty seven story, but
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  Speaker 3: that poor signal has seen you know, bank's funding costs
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  Speaker 3: through wholesale rates increase quite dramatically. But ultimately, you know,
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  Speaker 3: it doesn't change our outlook or derail the recovery that
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  Speaker 3: we're expecting. You know, if we look at intrat rates today,
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  Speaker 3: they're so materially lower than they were compared to this
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  Speaker 3: time last year, and they're still upsettings that you know
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  Speaker 3: should encourage this lift and consumption. It should encourage investors
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  Speaker 3: to be investing and businesses to invest in higher So
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  Speaker 3: we still, you know, still expect the forcurry to take place,
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  Speaker 3: even with that what.
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  Speaker 2: Are you expecting from the housing.
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  Speaker 3: Market the housing market or we are starting to see
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  Speaker 3: quite a list in activity. You know, how sales are
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  Speaker 3: up six percent compared to this time last year, and
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  Speaker 3: we always say, you know, where where house sales go,
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  Speaker 3: prices tend to follow interest rates. Again, they're always the
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  Speaker 3: largest driver for the housing markets too, So we do
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  Speaker 3: expect a lift. We're saying about two to three percent
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  Speaker 3: next year, and that's against the backdrop where you know,
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  Speaker 3: we do see that we have quite ample supply in
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  Speaker 3: the market right now, and you pair that with weak
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  Speaker 3: population growth because of this sort of migrate low migration
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  Speaker 3: levels that we're getting into the country right now, so
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  Speaker 3: that that does temper any bigger gains in house prices,
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  Speaker 3: but it's definitely an improvement from you know, what we've
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  Speaker 3: been seeing over the last two and a half years,
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  Speaker 3: which is that house prices have just largely trapped sideways.
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  Speaker 2: And Sabrina, how about households. Do you expect households will
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  Speaker 2: feel a bit of a shift in twenty twenty six
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  Speaker 2: and for a little bit of.
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  Speaker 3: Relief, Yeah, absolutely, I think we're hearing that a lot already.
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  Speaker 3: I think, you know, as households roll onto these lower
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  Speaker 3: interest rates. That makes it different. And as the housing
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  Speaker 3: market picks up, you know, we know that the wealth
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  Speaker 3: effect in New Zealand is quite real. So if we
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  Speaker 3: see those gains as two to three percent house based
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  Speaker 3: gains next year in the housing market, you know that'll
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  Speaker 3: add a bit more boost of confidence household. You know,
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  Speaker 3: sixty seven percent of QI we own their own house.
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  Speaker 3: So when the housing market does it better, you tend
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  Speaker 3: to feel a little bit better too. So we are
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  Speaker 3: we are hopeful.
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  Speaker 2: There, Sabrina. If you've got a good saying for twenty six,
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  Speaker 2: like we've survived twenty five or we were going to thrive,
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  Speaker 2: but we survived twenty five. Unfortunately robust recovery twenty six
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  Speaker 2: kind of has a ring to it, but we do.
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  Speaker 3: It's not as good as our previous rhymes, but it's
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  Speaker 3: fixed in twenty twenty six.
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  Speaker 2: Okay, fixed in twenty twenty six. You're nice, not bad.
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  Speaker 2: Better know what we came up with this morning, Sabrina.
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  Speaker 3: Thank you for trying.
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  Speaker 2: We tried, no, no, really honestly, we tried to and
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  Speaker 2: it didn't go very well. Thank you so much, Sabrina,
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  Speaker 2: really appreciate it. That was Kiwibank economist Sabrina Delgado there.
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