Are we at the turning point?

By Greg Smith

Pretty much everywhere you look at the moment the messages appear to be all about economic doom and gloom. The prices of food, petrol and many other essential goods continue to rise, putting pressure on consumer wallets. House prices are falling all over the country, with further salt being rubbed in the wounds by rising mortgage-rates, giving those who are coming (or about to come) off lower one-year fixed year deals a nasty shock.

Meanwhile many commentators and economists extol (almost gleefully in some cases) that the Kiwi economy is already in recession. Unemployment is at record lows, exporters are doing well, and borders are opening up, but economically, things are to only get tougher it seems. The message is that it is time to batten down the hatches (apart from the government, which has continued a massive spending splurge).

Then there’s the stock market. Emotive headlines always garner the most attention so it should not surprise that when kiwi shares recently went into a ‘bear market’ (falling 20% from last year’s peak) not long ago, it captured much media attention. The NZX50 has though rallied somewhat in recent weeks, but is still hovering around ‘bear market” territory, with the decline from the January 2021 high still around 20%. It has nonetheless been a ‘volatile’ first half of the year. The NZX50 lost 3.8% for the month of June and is around 16% lower in the first six months of 2022.