New Zealand is officially out of recession, but the chaos of Trump’s tariff policy remains a threat to medium-term growth, writes Catherine McGregor in today’s extract from The Bulletin.

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We’re officially out of recession

You might not have known it from the headlines – “NZ limps out of recession” said the Herald, while RNZ opted for “crawls” – but the economic data released on Thursday by Stats NZ were in fact significantly better than most economists expected. New Zealand’s gross domestic product (GDP) rose 0.7% in the three months to December 2024, after a 1.1% decrease in the September 2024 quarter. Economists’ forecasts had ranged between 0.2% and 0.5%. Kiwibank chief economist Jarrod Kerr said it was a “slightly positive surprise”, but growth was still in negative territory when viewed year-on-year. “Compared to December 2023, the economy is still 1.1% smaller,” he said.

ASB economist Wesley Tanuvasa said that while he welcomed the news, the “broader global headwinds” – such as Trump’s tariffs – meant it was unlikely the fourth quarter “drivers of growth can maintain their pace in 2025”. Those headwinds also meant the RBNZ would be sticking to its current interest rate track, he said. “Beyond 25 basis point cuts in April and May, the increasing skew of downside risks to the medium-term inflation outlook could see the RBNZ continue with OCR cuts.”

GDP result a small boost for Luxon 

Finance minister Nicola Willis and acting prime minister David Seymour said the figures were signs that “things are looking up” and indicated “the first green shoots of an economic recovery”. For Christopher Luxon, who has pointed to the sluggish economic recovery as a key reason for public dissatisfaction with the government, the confirmation of growth will be especially good news. “There are other issues – school lunches, the Treaty debate and perhaps even Luxon’s personal style – that may be playing a part,” writes Liam Dann in the Herald (Premium, paywalled). “But history tells us the economy decides elections in the end. When voters feel things are getting better, they don’t change governments.”

The tariff question

Back to those “broader global headwinds” and their impact on our economy. It’s still not clear how much Trump’s tariff rampage will directly affect New Zealand – there’s no indication tariffs were covered during Winston Peters’ meeting with US secretary of state Marco Rubio on Wednesday – but if the president sticks to his so-far vague plans on reciprocity, we might end up escaping relatively unscathed. As discussed in last Friday’s Bulletin, Trump wants to impose levies on US imports that match those already in place against US goods in their country of origin, but his administration hasn’t stated how the ratio would be calculated. New Zealand has a trade surplus with the United States and imposes “comparatively few tariffs on US imports, while paying a greater sum to access the US market of 340 million people”, writes Thomas Manch in The Post (paywalled), so we may not be too heavily hammered by new tariffs on our goods.

Of course, as also covered last Friday, New Zealand could still suffer significant second order effects from the trade war, especially when it comes to damage to the Chinese economy.

Rubio wants NZ to increase defence spending 

If Peters and Rubio didn’t discuss tariffs, what did they talk about? While Peters has remained tight-lipped about their meeting, other than to say he was “seriously pleased” with how it went, the US State Department issued a brief statement saying the two had discussed, among other issues, “avenues for strengthening defence cooperation through burden sharing, allowing our militaries to work more closely together, and ensuring security and economic strength in the Pacific region”.

Notes Manch (again) in The Post, “‘Burden sharing’ refers to the Trump administration policy of pushing allies and partners to increase their spending on defence, to shift the expense of global security away from the US.” Earlier this month the EU approved a massive increase to defence spending and “rearm Europe”, amid signs the US can no longer be relied on to come to member states’ aid if Russia were to attack.

Read more

• David Parker on what Trump and a whiplash world mean for New Zealand (The Spinoff)
• Trump tariffs won’t hit New Zealand, trade minister says (Interest.co.nz)

An 11-storey timber building planned for the thoroughfare has been denied consent, and it’s not just the passionate yimbies who are up in arms, writes Catherine McGregor in today’s extract from The Bulletin.

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K Road developer to appeal council decision

The developer behind a proposed 11-storey commercial building near the new City Rail Link (CRL) station on Karangahape Road is heading to the Environment Court after consent was denied by Auckland Council’s independent hearing commissioners. James Kirkpatrick Group (JKG) will appeal the decision. The commissioners said the Fearon Hay-designed building would be out of keeping with the area and too large for the site, an empty lot near the intersection with Ponsonby Road. According to the Herald’s Anne Gibson (Premium paywalled), JKG chief exec James Kilpatrick jr hopes the Environment Court will hear the matter this winter and overturn the original decision so his company can build. Housing minister Chris Bishop, an avid supporter of greater urban density, has labelled the commissioners’ decision “insanity”.

The case for

The mass timber building was designed to target a 6 Star Green Star rating, the highest possible standard representing “world leadership” in environmentally sustainable building practices. Also in its favour is the government’s National Policy Statement on Urban Development, the Auckland-specific version of which will likely come into effect this year. Under the densification standards, which are still subject to change, Auckland Council will be required to “enable more development in the city centre and at least six-storey buildings within walkable catchments from the edge of the City Centre, Metropolitan Centres and Rapid Transit Stops”. The proposed building would be a five-minute walk from the Karanga-a-hape CRL station, which is set to “transform the neighbourhood into a major transport hub, connecting buses and trains from many areas of Auckland” when it opens next year.

The objections

The commissioners rejected the plans, which had already been modified once, due to the building’s “more than minor” impact on the surrounding area, arguing that there was evidence it would dominate the streetscape and clash with the area’s historic heritage values. The commissioners heard from Green Party-endorsed Waitematā Local Board member Alex Bonham, who said she was concerned by the building’s amount of glass and lack of onsite parking. The council’s urban design expert Chris Butler said “the development would result in a number of positive urban design outcomes… [but] these were outweighed by the adverse bulk and dominance effects on the Karangahape Road frontage of the site”. The designs included spaces for restaurants and retail along the building’s ground floor frontage.

A remarkable flair for saying no

In a Spinoff column titled ‘Nobody is as creative as Auckland Council at saying no’, Hayden Donnell argues the K Road decision isn’t anything new. “Auckland Council has been issuing bizarre consent denials with a prodigiousness and creative flair matched only by early-career Mozart,” he writes, despite “central government politicians of all stripes” emphasising the importance of new construction. “New Zealand, they argue, has a debilitating housing crisis caused in large part by councils not issuing enough resource consents for roughly 50 years straight,” Donnell writes. “Furthermore, the nation is currently a bit skint, and needs the economic activity generated by new residential and retail buildings.

“Auckland Council simply does not care. It cannot be stopped. The maestros won’t stop saying no until their symphony is finally complete and the city resounds in a great synchronised chorus of ‘consent application denied’.”

More from The Spinoff

• Nobody is as creative as Auckland Council at saying no
• Auckland Council opposes new housing because motorists won’t be able to see a hill
• Chris Luxon is right about our culture of no