New Zealand's economy is splitting in two, and that split poses a problem for the ruling National Party ahead of the November 7 general election, according to a Reuters report datelined Lower Hutt, Nov 2.
Tourism and higher agricultural exports are supporting rural areas, especially the South Island, where second-quarter retail spending rose 8.6% on the year. In urban centres such as Auckland and Wellington, consumer spending rose a smaller 5.8%. Unemployment fell 0.6 percentage points in the South Island but rose 0.7 points in the North Island over the same period, the report says.
House prices are down almost 30% from their peak in Wellington and 24.7% in Auckland, compared with a 17% national drop, the report says.
Reuters reports that National won the 2023 election on promises to cut inflation and government debt. The party now says it has laid the foundations for future growth. Chris Bishop, the National incumbent in the Hutt South constituency, told Reuters, "My sense is that our economic plan is beginning to work, and we need more time to see it through."
Kiwibank Chief Economist Jarrod Kerr said, "A third of the economy is doing really well, and two-thirds are still trying to find their feet." Political commentator Liam Hehir said National is asking voters to wait longer for benefits. "You don't get three years of that," he said.
Polls show no clear route to a governing coalition after the election, the report says. A left-wing coalition is proposing a larger government role on household pressures and housing affordability.