| Source: KOF Economic Institute
Global interdependencies are gradually recovering, as the KOF Globalisation Index for 2022 shows. Globalisation is returning to its pre-COVID-19 pandemic level. Economic globalisation in particular has provided a boost here, while social and political globalisation continue to suffer from the after-effects of the pandemic. The most globalised country is the Netherlands, followed by Switzerland and Belgium. Economic globalisation recorded the strongest growth in 2022. The easing of pandemic-related restrictions revitalised international trade in goods and services. Trade in services especially benefited from the lifting of most pandemic-related restrictions. Trade in goods also proved robust, supported by the resolution of supply-chain issues and continued high global demand. In contrast, financial globalisation weakened. Foreign direct investment, portfolio investment and international debt levels all declined as a share of gross domestic product (GDP). The growth of economic globalisation in 2022 was therefore driven primarily by trade flows rather than by financial interdependencies. Social and political globalisation achieving modest growth Social globalisation is showing its first signs of recovery – particularly in areas such as cultural exchange and personal mobility. The social globalisation index rose further in 2022 owing to improvements in the institutional framework, such as international agreements (de jure), as well as an increase in actual cross-border contacts and activities, such as tourism and cultural exchange (de facto). Nevertheless, its level remains below that of 2019, as international mobility remained limited. Political globalisation virtually stagnated. While institutional frameworks, such as membership of international organisations and multilateral treaties, improved slightly (de jure), the actual presence of international cooperation, for example in the form of diplomatic missions and non-governmental organisations (NGOs), decreased (de facto). Geopolitical tensions and a sharper focus on national interests helped to slow down global cooperation in this area. Country analysis: The Netherlands was once again the most globalised country in 2022. This is primarily due to its role as a central trading hub in Europe. The port of Rotterdam – one of the largest transhipment centres for goods in Europe – plays a key role in the Netherlands’ exceptionally large import and export volumes. This economic interdependence emphasises its importance in international trade. Switzerland follows in second place, playing a leading role in all three dimensions of globalisation – economic, social and political. In particular, the strength of its exports in the pharmaceutical and chemical sectors and its close integration into international organisations and trade networks secure it an outstanding position in the rankings. Belgium is in third place, supported by its strong integration into the European economy and its high density of international organisations. Russia, on the other hand, saw one of the sharpest declines in the globalisation index in 2022. International sanctions and the withdrawal of numerous international companies as a result of geopolitical tensions led to a significant decline in economic and social interdependencies. Outlook for 2023: inflation and trade shaping globalisation Inflation remained high in 2023, driven by energy crises and structural supply shortages, which weighed on global consumption and demand. Trade in goods declined while trade in services continued to return to normal, mainly owing to the recovery in tourism. At the same time, geopolitical tensions and economic uncertainty caused global trade flows to be reconfigured. These developments are likely to be reflected in the next KOF Globalisation Index. |
Economy – May New Zealand’s 2025 be merry and bright – ASB
Source: ASB
ASB is looking ahead to 2025 with its Economics team considering what factors are likely to have the biggest impact on New Zealand’s economy. While much of the uncertainty seen throughout 2024 will likely remain, there is more reason to be optimistic for the new year.
“It’s amazing what a difference a year makes. The general feeling was pessimistic at the start of this year and while we’re not out of the woods and challenges still lay ahead, there is a sense of guarded optimism about what’s around the corner,” says ASB Senior Economist Mark Smith.
ASB’s Economics team will be watching the following through 2025:
New Zealand interest rate outlook
While interest rates in New Zealand and offshore markets have seen a period of pronounced volatility in recent years, they are now trending downwards as inflationary pressures subside and with the Reserve Bank of New Zealand (RBNZ) having cut the Official Cash Rate (OCR) by 125bps throughout 2024.
“The question is whether future falls will be modest or more substantial,” says Smith. “We’re forecasting further OCR cuts of 100bps next year, including a 50bps cut in February, taking the OCR to 3.25% by the end of next year. This should mean borrowing interest rates for households are likely to be in the 5% to 6% range by the end of 2025. The average interest rate on mortgage borrowing is assumed to end 2025 about 100bps lower than its 6.4% Q3 2024 peak”.
The return of low and stable inflation
Brighter signs have also emerged over 2024 as inflation has dropped around the world following the COVID-19 period which saw high and variable inflation impede economic efficiency. In New Zealand tradeable CPI prices fell about 1.5% over the year with ASB estimating CPI inflation will end the 2024 calendar year virtually at the midpoint of the RBNZ’s 1-3% target. Looking ahead, ASB anticipates annual CPI inflation to modestly tick up to 2.6% by the end of 2025.
“The return to low and stable inflation will make it easier for firms, household and government to plan and invest, helping to grow the economy.”
Lower inflation combined with falling interest rates is also taking pressure off household budgets.
“To put it in context, during the peak of the COVID-19 pandemic, households were facing annual increases of more than $100 per week in living costs. In 2024 this slowed to an extra $30 per week and in 2025 we believe it will shrink to less than an extra $10 per week,” says Smith.
Consumer spending and the housing market
A question that remains is whether falling interest rates and inflation and an easing in cost-of-living pressures will be enough to drive a consumer spending and housing market rebound at a time of rising unemployment.
While household spending volumes are expected to end 2024 about 6% below early 2022 peaks on a per-capita basis, and household net worth and house prices are likely to end 2024 about 20% below late 2021 peaks in inflation adjusted terms, there is reason to be hopeful for 2025.
“The moderation of inflation will ease pressure on household and business budgets while lower interest rates should help to kick-start greater spending in the retail, wider services and construction sectors which should in turn support labour incomes and cap the 2025 lift in the unemployment rate.
“Lower interest rates should also provide a welcome boost to the housing market and we expect house prices to rise by 5-10% over 2025, although we don’t expect these to surpass the record peaks we saw in 2021 until 2026,” says Smith.
New Zealand economic rebalancing
One of the bright lights for 2024 has been the commodity export sector with New Zealand export prices up about 25% over August 2023 lulls in USD terms. These results have been bolstered by the combination of strengthening offshore demand, production constraints for overseas competitors and favourable domestic climatic conditions, particularly in the primary sector.
“While we’ve seen some good gains, we remain wary of the global outlook and the fact our export intensity and overall productivity performance is low in relation to our OECD peers.
“As a country we need to be thinking longer-term and have a more outward and export focus if we’re going to improve New Zealand’s low productivity performance and domestic incomes. Taking a different approach will require involvement from everyone from Government and regulators to businesses and households. How we become more future focused is something our team will be looking more closely at in 2025,” says Smith.
Trump 2.0
While financial market sentiment has so far remained constructive since former US President Donald Trump was elected in early November, it remains to be seen what the impact of a second Trump presidency will have on New Zealand.
“The US is New Zealand’s third largest trading partner so its trade policies under Trump will be of the greatest concern to Kiwi exporters. If tariffs are announced, the impact will depend on their size, how long they are imposed for, and how targeted they are. The response of other countries, particularly China, will also be key and could impact global growth if they are retaliatory. That said, if we learnt anything the first time around, it’s to expect the unexpected and with Trump already having changed his view on tariffs, these could simply be a negotiating tactic – time will tell.
“While overall there’s cause to feel more positive about the year ahead, there will also need to be an element of wait and see. As we’ve seen in 2024, a lot can change in a year,” concludes Smith.
The full 2025 Outlook Report, along with other recent ASB reports covering a range of commentary, can be accessed at the ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html
First Responders – Burnham Fire Update #3
Source: Fire and Emergency New Zealand
Firefighters supported by two helicopters are continuing to work on extinguishing the vegetation fire that has been burning alongside SH1 near Burnham this afternoon.
Incident Commander Mike Johns says that the response is beginning to be scaled back slowly, but multiple crews, tankers and fire trucks are still at the scene along with two helicopters with monsoon buckets.
Residents from nearby homes who were evacuated this afternoon have been allowed to return home
Crews will be patrolling the scene overnight to deal with any flare-ups.
The fire size has not changed – it is still estimated to have burned about 30 hectares, partly within the Selwyn River bed and partly on adjoining farmland.
SH1 has reopened.
A fire investigation is underway. The investigators’ preliminary finding is that the fire is linked to a vehicle that experienced a tyre blow-out. However, that will not be confirmed until the investigation is complete.
Business News – Operation haircut: Taking the clippers to compliance costs – BusinessNZ
Source: BusinessNZ
BusinessNZ welcomes a new review by the Ministry for Regulation into the hairdressing sector, saying it’s time for a small business compliance makeover.
BusinessNZ Chief Executive Katherine Rich says the sector has been calling for an update to out-of-fashion rules for decades.
“For a sector based around staying on-trend, current hairdressing and barbering regulations date as far back as the 1980s. BusinessNZ was delighted to work with peak body Hair and Barber NZ to get the ball rolling on change for these businesses.
“BusinessNZ works to solve business issues for all businesses – large and small, and is determined to cut red tape across the economy. In order to eradicate red tape and make it easier to do business, we must get into the detail – sector by sector.
“That’s why the BusinessNZ Network is working methodically through all parts of the economy, to identify and highlight areas where the Ministry for Regulation can give outdated and costly regulations a haircut.”
Mrs. Rich says hairdressing and barbering is an industry worth more than 1.4 billion dollars to the New Zealand economy, with businesses in all communities across New Zealand. This latest Ministry review stems from ideas shared by hairdressers, as part of BusinessNZ’s small business focus groups.
“Results of these nationwide conversations between small business and Government were shared in our latest report, ‘Reducing compliance burden on New Zealand small businesses ‘. The report highlights sector-specific pain points and offers solutions on how to resolve them.
“These solutions have been provided to Government and we’re keeping track of progress made across all parts of the economy. A review into hairdressing is an excellent place to start.”
The BusinessNZ Network including BusinessNZ, EMA, Business Central, Business Canterbury and Business South, represents and provides services to thousands of businesses, small and large, throughout New Zealand.
First Responders – Burnham vegetation fire update #2
Source: Fire and Emergency New Zealand
Three houses have been evacuated as a precaution due to the vegetation fire near Burnham, Canterbury.
The fire area is currently estimated to be around 30 hectares in size.
One structure – a shed – has been destroyed by the fire.
The fire is not contained or controlled.
There are 22 trucks, tankers and support vehicles on the ground, with five helicopters in the air.
SH1 between Dunsandel and Burnham remains closed and will be for some time. People should continue to avoid the area and delay travel if possible.
Northland News – Ngāti Hine, NRC sign first-ever Iwi-Council resource management agreement in Taitokerau Northland
Source: Northland Regional Council
Ngāti Hine and the Northland Regional Council (NRC) have made history this week, signing the first-ever Iwi-Council resource management agreement in Taitokerau Northland.
A large gathering, including Ngāti Hine and NRC representatives, whānau, and guests, gathered at Otiria Marae today (subs; Thursday 12 December) to take part in the official signing of the Mana Whakahono ā Rohe (MWAR) between Ngāti Hine and NRC.
MWAR agreements were introduced into the Resource Management Act (RMA) in 2017 by the Crown as a way of improving working relationships between tangata whenua and councils, and to provide more opportunities for tangata whenua involvement in RMA decision-making processes.
While several Northland hapū-NRC agreements have already been signed, this most recent agreement is a first for a Northland Iwi.
Ngāti Hine Deputy Chair Pita Tipene says the event marks an important milestone for Iwi-Council relations.
“Our whanau and hapu of Ngāti Hine have been working tirelessly in our many valleys as champions for the environment.”
“Moreover, the regional council team has worked in close collaboration with our whanau and hapu, building strong relationships and ways of working at the flax roots.”
“This significant milestone agreement will further support our integrated efforts as rangatiratanga and kawanatanga working in earnest together for the benefit of our environment as envisaged by Te Tiriti o Waitangi.”
Northland Regional Council Chair Geoff Crawford, who signed the agreement on behalf of the regional council, says it is a momentous occasion, and he is proud of the growing partnership between NRC and Ngāti Hine.
“This signing is a great day and represents our commitment to Te Tiriti o Waitangi and working with tangata whenua for the benefit of all living in Taitokerau Northland,” Crawford says.
“We are grateful for all the hard work Ngāti Hine and our regional council have put into making this happen and I look forward to seeing where this fantastic result takes us.”
Council Deputy Chair Tui Shortland agrees the binding agreement is a significant step in further developing the parties’ working relationship.
“The Mana Whakahono ā Rohe agreement will help to develop greater mutual understanding of the parties’ expectations and aspirations across a range of resource management issues and will be a significant step in the practical realisation and implementation, through partnership, of those aspirations.”
Renewable Energy – The tipping point of solar energy uptake in New Zealand has just begun
Source: Harrisons Solar
“The future of rooftop solar is now here: the tipping point of solar energy uptake in New Zealand has just begun” says NZ’s largest solar retailer
In the early years of solar adoption – solar panels were expensive, so leasing a solar system over a long period of time was a great way to get into solar. However, as the prices of solar panels & home batteries have decreased significantly, solar technology continues to advance, and major banks offering cheap solar loans at interest rates as low as 0-1%; leasing a solar system now doesn’t stack up and solar retailers, like Harrisons Solar, are experiencing record numbers of installations.
While solar leasing customers could have expected a small reduction on their monthly power bill, customers who have instead bought their solar panels out right are seeing massive savings on their power bills, sometimes eliminating power bills in summer months, a credit back for what they sold to the grid, plus an increase in their house value.
“Harrisons Solar is recognised as New Zealand’s #1 retailer of rooftop solar and batteries, the most trusted solar installer in NZ, and the only premium certified Tesla Powerwall installer in the country” says Managing Director, Phil Harrison.
In light of recent events, “Harrisons Solar are proud to reaffirm our dedication to sustainable energy solutions and to helping New Zealand households and businesses to slash their power bill, have energy security, and live more sustainably.”
Phil adds “2024 has been another standout year for Harrisons Solar, showcasing our leading market share position through record new installations and a growing footprint covering all of New Zealand which creates meaningful employment opportunities for Kiwis across the country.” Harrisons Solar continues to set the benchmark for customer service with over 500+ 5 star Google Reviews, delivering top-quality, reliable solar systems that cater to the unique needs of New Zealand homes.
Harrisons Solar acknowledges the significant contributions of other industry pioneers like SolarZero in promoting solar energy adoption in New Zealand. While their leasing-based model was unsustainable, their efforts paved the way for the current boom in solar energy. In emerging, disruptive sectors, it is common for early entrants to experiment with various models, not always successfully.
Harrisons has been in business for over 62 years, as a trusted leading retailer for solar, flooring, curtains and blinds and remains committed to delivering reliable, efficient, and affordable home and solar solutions that empower our customers and contribute to a sustainable future. Harrisons Solar’s long-standing history and continuous innovation enable us to effectively support New Zealand’s continued adoption of solar energy – in short,Harrisons Solar are now gearing up for an even brighter, more sustainable future.
To enquire about solar, see: www.harrisonssolar.co.nz
About Harrisons:
Harrisons has been trusted by Kiwis since 1962 to make homes wonderful, the easy way.
Harrisons are:
#1 in-home flooring retailer in New Zealand (www.harrisonscarpet.co.nz)
New Zealand’s #1 provider of custom-made curtains (www.harrisonscurtains.co.nz)
#1 in retail solar sales in New Zealand (www.harrisonssolar.co.nz)
With over 130 local expert franchisees nationwide
Harrisons are 100% mobile, bringing our showroom and expert advice directly to your home with a free in-home consultation. As a proud, locally owned business, our local business owners are dedicated to delivering exceptional service and the best solutions for your needs.
Our commitments include the Harrisons Best Price Promise, no-payment and interest-free finance options, and our quality, service, installation, and satisfaction promises. We’re also proud to support the Breast Cancer Foundation NZ, having donated over $900,000 to help fund life-saving research, education, and patient support programmes.
Business – Fonterra announces its largest decarbonisation project to date
Source: Fonterra
Fonterra is set to convert two coal boilers to wood pellets at its Clandeboye site in South Canterbury, a crucial step in Fonterra’s commitment to exit coal by 2037.
The $64 million investment will cut the Co-operative’s overall emissions by nine per cent with reductions totalling 155,000 tonnes of CO2e each year, the equivalent of removing more than 64,000 cars from New Zealand roads each year.
Fonterra Chief Operating Officer Anna Palairet says the project marks a significant milestone in Fonterra’s sustainability journey as it works towards a 50.4% reduction in absolute Scope 1&2 emissions by 2030, from a 2018 baseline.
“This conversion project at Clandeboye is another demonstration of our Co-op’s commitment to sustainability and climate action and follows successful boiler conversions at our Te Awamutu, and Hautapu sites.
“In making our largest decarbonisation investment to date, we’re reducing our environmental impact – while securing operational resilience. This project represents a significant milestone in our journey towards a coal-free future.”
Fonterra’s Site Operations Manager – Cheese and Protein, Conrad Harle echoes this sentiment believing the investment will drive fuel diversity in the South Island by providing the demand signals to establish wood pellet supply chains in the region.
“The move to wood pellets for the Clandeboye site is a great thing for the South Island as it will play a role in diversifying the country’s renewable energy options while strengthening fuel optionality at the site.
“The team at Clandeboye are both proud and excited to play a role in the establishment of these regional supply chains that give added resilience and further options for future decarbonisation investments at our other sites, primarily Darfield, Studholme, Tākaka, and Edendale.”
The conversion is co-funded as part of a previously announced EECA (Energy Efficiency and Conservation Authority) partnership. The partnership agreement includes the Co-op achieving approximately 1.2 million tonnes of CO2 cumulative reductions from its coal reduction activities this decade, enabling the Co-op to lift its 2030 target from a 30% to a 50% absolute reduction by 2030.
EECA Chief Executive, Dr Marcos Pelenur, says it is encouraging to see Fonterra continue to progress their emissions reduction programme.
“It is a milestone that once again highlights the central role of biofuel in the clean energy space and the use of clever technology in increasing energy efficiency.”
The conversion of the two boilers is scheduled to be completed and operational by September 2025. Plans to transition the site’s remaining boilers onto renewable energy will continue as part of the Co-operative’s wider decarbonisation plans.
The site has recently completed another decarbonisation project with the installation of a heat recovery system in its lactose plant back in February 2024. This was the first project co-funded under EECA for the Co-operative focusing on energy efficiency. The new system allows the recovery of high-grade heat from the lactose plant’s equipment, saving the site 2.5 tonnes of steam per hour and decreasing annual carbon emissions by around 3,000 tonnes – the equivalent of removing around 1,250 cars from New Zealand roads.
Further details on the Co-op’s work to reduce emissions associated with manufacturing:
Coal free in manufacturing operations in the North Island (November 2024): With the turning off of the Co-op’s Waitoa site’s last coal boiler, the Co-op announced it was now out of coal in the North Island. Work continues to transition the five sites in the South Island that still use coal.
Edendale electrode boiler (October 2024): The Co-op’s first electrode boiler powered up in October this year, generating steam from electricity, and cutting the site’s annual overall emissions by 20% or around 47,500 tonnes – the equivalent of removing around 20,000 cars from New Zealand roads.
Hautapu boiler conversion (August 2024): Conversion from coal to wood pellets, with an expected annual emissions reduction of around 12,000 tonnes – the equivalent of removing around 6,500 cars from New Zealand roads.
Clandeboye heat recovery project (February 2024): The new heat recovery system in the Lactose plant aims to decrease annual carbon emissions by around 3,000 tonnes – the equivalent of removing around 1,250 cars from New Zealand roads.
Waitoa wood biomass boiler (October 2024): The new boiler at Waitoa has halved coal usage at the site, cutting emissions by around 46,000 tonnes annually – the equivalent of removing around 20,000 cars from New Zealand roads.
Whareroa heat pumps (September 2023): Installation of New Zealand’s largest heat pumps as part of a refrigeration upgrade, decreasing annual carbon emissions by around 9,100 tonnes – the equivalent of removing around 3,800 cars from New Zealand roads.
Stirling biomass boiler (August 2023): Stirling’s wood biomass boiler has reduced annual carbon emissions by around 18,500 tonnes – the equivalent of removing around 7,700 cars from New Zealand roads – and is the Co-op’s first site running on 100% renewable thermal energy.
Te Awamutu boiler conversion (August 2020): Converted the coal boiler to use wood pellets, reducing coal use and emissions by around 84,000 tonnes – the equivalent of removing around 35,000 cars from New Zealand roads.
Brightwater biomass co-firing (September 2018): Moved to co-firing wood biomass, reducing overall annual site carbon emissions by around 2,400 tonnes – the equivalent of removing around 530 cars from New Zealand roads.
Notes:
· Clandeboye fact sheet : https://view.publitas.com/fonterra-comms/clandeboye_fact-sheet_2024/page/1
About Fonterra
Fonterra is a co-operative owned and supplied by thousands of farming families across Aotearoa New Zealand. Through the spirit of co-operation and a can-do attitude, Fonterra’s farmers and employees share the goodness of our milk through innovative consumer, foodservice and ingredients brands. Sustainability is at the heart of everything we do, and we’re committed to leaving things in a better way than we found them. We are passionate about supporting our communities by Doing Good Together.
Energy – Sky Stadium to lower emissions and energy consumption as Ecobulb replaces thousands of lights at the venue
Source: Ecobulb
The Wellington Regional Stadium Trust will lower its carbon emissions and energy use at Sky Stadium as it embarks on the replacement of thousands of existing light fittings with energy efficient LED luminaires across the venue.
The lighting upgrade at Sky Stadium is an important step in the venue’s energy transition plan, supporting a shift to a low-carbon energy future.
“A big step towards decarbonisation is the replacement of existing lights with energy efficient lights and lighting control systems. This will reduce the stadium’s carbon emissions with the added benefit of reducing our maintenance and energy costs,” Sky Stadium Operations Manager Hamish Allen says.
After an extensive tendering and selection process, the Trust contracted energy efficiency experts Ecobulb to carry out the Sky Stadium lighting upgrade. Ecobulb’s commercial LED luminaires use about a fifth of the electricity of older lighting technology, which translates to a lower carbon footprint.
“We selected Ecobulb because of their experience in undertaking large scale commercial lighting upgrades using their ultra-high efficiency LEDs,” Allen says.
“Ecobulb’s goal is to save as much electricity as it takes to power New Zealand for a year. The company is already two-thirds of the way there,” Ecobulb Managing Director Dr Chris Mardon says.
“We’re delighted to partner with Wellington Regional Stadium Trust to upgrade one of New Zealand’s premier sporting and entertainment venues to LEDs, a project which comes hard on the heels of Ecobulb completing a similar LED lighting upgrade at the nearby 16-level Ministry of Justice building.”
ABOUT ECOBULB LIMITED:
Christchurch company Ecobulb has 25 million of its “Ecobulbs” in 3.4 million homes and businesses in New Zealand, Australia and the United States, and has completed energy assessments in 45,000 New Zealand homes, through 107 projects partnerships with electricity generators, retailers and lines companies, governments, city councils, supermarkets, Shell stations and third-party installers.
These Ecobulbs are saving an estimated $6.0 billion electricity and 19 million tonnes of carbon dioxide emission reductions over their lifetimes, meaning Ecobulb is 64% to its goal to “Save enough electricity to power New Zealand for one year”.
BusinessNZ – ACC review timely
Source: BusinessNZ
BusinessNZ welcomes the announcement of an independent review of ACC.
The announcement comes at the same time as disclosure of increased costs in ACC services and resulting increased levies.
BusinessNZ Chief Executive Katherine Rich says all businesses and households will bear the burden of the significant levy increases.
“Businesses and households deserve better cost management and more transparency and accountability from ACC. It is hoped that an independent review will help achieve that.
“I am pleased the Government has considered BusinessNZ’s submission that raised serious concerns about rehabilitation rates and the funding policies of ACC.
“We are concerned at the trend of claim volumes rising faster than population growth and believe ACC should improve its systems for accepting, managing, and monitoring claims.
“A comprehensive review of ACC’s funding policy is also needed. We pointed out that some ACC Accounts are currently underfunded, which will become very costly for future levy-payers. The Earners Account is currently only 90% funded, with a shortfall of $1.6 billion.
“The Accident Compensation Act requires all Accounts to be fully funded to ensure they can meet the lifetime cost of current claims, but we believe the spirit of the Act is currently not being met.
“We welcome the coming independent review of ACC on behalf of all businesses, workers and vehicle owners paying ACC levies who need assurance that the Scheme is being operated according to its statutory requirements,” Mrs Rich said.
The BusinessNZ Network including BusinessNZ, EMA, Business Central, Business Canterbury and Business South, represents and provides services to thousands of businesses, small and large, throughout New Zealand.