Reasons Behind Kiwis' Perception of Economic Struggles Despite Growth

New Zealand's economy has been growing at a reasonable pace, according to official data from Statistics New Zealand. Gross domestic product rose by 1.8%, and job numbers rose by 1.1% over the past year.

Despite this growth, many people feel that the economy is in poor shape. Tony Alexander, an independent economics commentator, suggests several reasons for this disparity. He notes that business margins are being crunched due to rising costs since 2019, but many businesses lack the pricing power to pass these costs onto their customers.

Average wage growth has exceeded the rise in the cost of living since 2019, but some key items have soared in price, including council rates, insurance, electricity, butter, and red meat. Alexander also points out that house prices around the country have not moved significantly over the past three years, with a 3% drop in Auckland and a 6% drop in Wellington.

Furthermore, Alexander notes that New Zealand is becoming less productive, with a 4% decline in output per unit of input since 2019. He also lists several global events that could potentially push prices higher, including El Niño, Bird Flu, Russia's war against Ukraine, and the impact of AI on computer chip prices.