Hamish Patel (mortgage adviser) and Darcy Ungaro (investment adviser) discussed the future of stagflation. How will the central bank react to a stagnant economy with high inflation? It seems we have started to live in a world where we look to the central bank for help. Maybe it’s time for us to collectively forge our own solutions.
AI to fix our productivity malaise
One of the key themes for New Zealand has been losing work to countries with much cheaper labour forces. AI will fundamentally change the nature of labour costs and quality. New Zealanders are an innovative bunch, and it will be interesting to see where our entrepreneurs take this game-changing technology. In the home loan advice industry alone, multiple solution providers have already lowered costs and improved the quality of advice.
Demand destruction of dirty energy
The switch away from fossil fuels is only set to intensify. Our energy production has been fairly clean in New Zealand compared to many other countries, and this is about to accelerate as more New Zealanders start producing their own energy. In the past, every dollar increase at the pump meant less money for local businesses — but that calculation will be different in the future. Every Kiwi who switches to an EV becomes a more resilient consumer. Now, it actually makes economic sense to save the environment.
House prices a bargin
It is interesting that inflation over the past few years — with more on the horizon — has driven up the price of almost everything, except houses. In some sense, house prices were used as a mechanism to push money into the economy in response to the lockdowns, which caused them to shoot up sharply before correcting as inflation spread to other areas. Now, as the price of everything else continues to rise, one has to wonder how house prices can remain stagnant. With more inflation on the way, will house prices catch up?
Can high interest rates fix stagflation?
No
Your situation matters
Rather than getting caught up in broader economic narratives, you should focus on the best solutions for your own timeline. Seeking financial advice in New Zealand means getting a quality, tailored set of solutions that are robust for you and your family. So don’t read too much into this article — get advice that’s made for you. Reach out to a good financial advice firm, such as ours.
