What is New Zealand’s ideal population?

Posted on June 5, 2026 by Keith Woodford

 Population policy lies at the heart of future New Zealand.

In recent weeks I have been writing articles about New Zealand’s economic conundrum, with this being a complex mix comprising stagflation, lack of economic growth and low productivity. To a large extent, it has been a dismal story of how New Zealand has been sinking lower and lower in global rankings, and with per capita incomes in decline in recent years.

I finished my last article by asking a key question about population. Do we need more people to underpin future economic growth? Or does ongoing population growth itself lie at the heart of our economic problems?

I did not attempt to answer the population question in that article. I knew that it required an article of its own. I also knew it was dangerous territory.

Continue reading →
Posted in The economy, Uncategorized | 11 Comments

Why is New Zealand’s productivity going backwards?

Posted on May 16, 2026 by Keith Woodford

Productivity in New Zealand is lagging. This is clearly evident from data produced by the Stats Dept and published on 23 April.

In the last five data years (2020-2025), labour productivity increased by just over one percent in total. Capital productivity during this period declined by 6.7 percent. Multi-factor productivity declined by 3.0 percent.

According to Deloitte, New Zealand’s recent performance places us at 63 out of 67 mid and high-income countries.

These data align with the same story I told in my recent article ‘Searching for growth’.

The New Zealand economy is in a funk!

Continue reading →
Posted in Uncategorized | 5 Comments

Searching for economic growth

Posted on May 8, 2026 by Keith Woodford

Per capita economic growth is a big challenge for New Zealand in the years ahead.

This article was first published at interest.co.nz on 26 April, 2026. This and other articles, including multiple comments, can be obtained at https://www.interest.co.nz/users/keith-woodford

In the 20 years from the turn of the century through to December 2019, the New Zealand economy, as measured by GDP, increased by 74%. The average rate of growth was 2.8% compound per annum.

During this period the population increased by 29.7%. This means that per capita GDP rose by 34.2% over those 20 years, giving an average per capital compound annual increase of 1.5%.

Then COVID came along and many things changed.

From December 2019 through to December 2025, the economy grew by only 8.3% in total while the population increased by 6.3%.  Hence, on a per capita basis, total economic growth for the six-year period was a measly 2.0%. On a per capita basis, economic growth averaged only 0.3% per annum.

Continue reading →
Posted in macroeconomics, The economy, Uncategorized | Tagged , | 4 Comments

Stagflation is baked in

Posted on May 4, 2026 by Keith Woodford

This article was written on 18 April and published at interest.co.nz on 19 April 2026

Stagflation is a situation where the economy is stagnant, inflation is out of bounds, and unemployment is high. That sums up the reality of New Zealand.

This reality runs well ahead of the statistics. For example, as I write this on 18 April, the latest quarterly data for GDP (gross domestic product) relates to quarter four (Q4) of 2025. It will be 18 June before we receive data for Q1 of 2026.

I do not criticise this apparent tardiness. It is simply the way things are. Even then, the Q1 numbers will be provisional.

The Effect of the Iran-War
The Iran war will only have a modest effect on official GDP for Q1 2026. This is because of the way GDP is measured.  Official GDP for Q1 measures the level of activity in the economy over the whole period of January, February and March, and only one month of those three was a ‘war month’.

This means that what we are experiencing right now, in the second half of April, will not be evident in quarterly GDP data until the second half of September when Q2 data becomes available. Note that GDP is always expressed after adjustment for inflation.

Continue reading →
Posted in macroeconomics, The economy, Uncategorized | Tagged , , , | 1 Comment

What causes inflation?

Posted on December 18, 2025 by Keith Woodford

[This article was first published at https://www.interest.co.nz on 7 December 2025]

Inflation lies at the heart of economic thinking and decision making. What are the fundamental causes? Is inflation distorting our economy? Can we do better? The new Governor of the Reserve Bank seems to think we can do better and plans a ‘laser focus’ on inflation.

It is widely recognised that inflation can be either cost-push or demand-pull. It is also widely accepted that inflation expectations influence both purchase and pricing decisions, with this feeding back at a macro level to self-fulfilment of the expectations.

These explanations, despite being correct, are superficial.

Simply knowing that the above explanations are true, in itself does very little to help policymakers prevent inflation. If the solutions were simple, we would not be in our present New Zealand situation with inflation at three percent per annum despite a stagnant economy.

Three percent per annum of compounding inflation does not necessarily sound very much. However, it means prices double every 24 years. In 100 years, prices increase 19-fold.

 In the last five years since September 2020, our inflation rate, using official CPI data (Reserve Bank series M1), has actually averaged 4.6 percent per annum. This is despite the Reserve Bank mandate to keep inflation between one and three percent in the medium term, with a specific focus on the midpoint of two percent. Continue reading →

Posted in macroeconomics, The economy | 1 Comment

North Island sheep farms are more beef than sheep

Posted on November 18, 2025 by Keith Woodford

This article started in my mind as an article on New Zealand’s sheep and beef farms. But once I started, I was quickly self-reminded that there are fundamental differences between the islands.

In the North Island, what were traditionally thought of as sheep farms, are now earning more from beef than sheep. In contrast, in the South Island sheep still reign supreme on non-dairy pastoral land.

So, this article focuses on the North Island, with the South Island left for another time.

Industry-good organisation Beef+Lamb has three categories of sheep and beef farms in the North Island. These are labelled Class 3, 4 and 5 in ascending order of farm intensity. As for where Classes 1 and 2 have got to, they are the least intensive South Island pastoral farming systems. Likewise, Classes 6,7 and 8 are the most intensive systems, also all in the South Island.

The analysis that follows draws on data from the Beef+Lamb Survey of sheep and beef farms through to and including 2024/25 data, plus early estimates for 2025/26 as at 11 September 2025.    Continue reading →

Posted in sheep and beef farms, Uncategorized | 6 Comments

Fonterra has always struggled with dairy consumer brands

Posted on November 4, 2025 by Keith Woodford

Fonterra’s sale of its consumer brands to an overseas owner marks the end of an era.

There was always a structural tension within the co-operative between the ideal business structure for ingredients versus consumer brands. Perhaps it was inevitable that there would be an eventual parting of the ways.

Whether or not the sale to French company Lactalis of the consumer-focused division for $4.4 billion is the best outcome for New Zealand is a moot point. My own preference would have been a public company headquartered in New Zealand, with Fonterra retaining a minority interest. Continue reading →

Posted in Agribusiness, Fonterra, Uncategorized | 9 Comments

How long can sheep and beef returns stay in the sweet spot?

Posted on October 31, 2025 by Keith Woodford

This year is a remarkable time for sheep and beef farms, with record prices for both lamb meat and beef. Farm-gate prices are up in the order of 30 percent since 2024 and in some situations even more. It is a sweet spot that won’t be maintained.

I know of no-one who foretold the current sweet spot. It remains somewhat of a puzzle to understand and put the causes in some sort of order.

One but only one of the causes is the decline in the New Zealand dollar.  Currency rates are volatile and trends depend very much on the starting point. By my reckoning, the New Zealand dollar has dropped on average around five percent over the last year relative to the US dollar.

Depreciation against the euro has been about nine percent over this time. Continue reading →

Posted in sheep and beef farms, Uncategorized | 8 Comments

The price of sheep and beef land makes no economic sense

Posted on September 29, 2025 by Keith Woodford

The price of sheep and beef land is not sustainable. It makes no economic sense. The price has to crash both in real and nominal terms. The only question is when will this crash occur.

There are three linked factors contributing to why the price is unsustainable.

The first factor of fundamental importance is that is it not possible for most farms to pass through the generation-succession process at current prices.  There is no chance of one sibling buying out other siblings unless there are substantial off-farm assets to also be divided up. Even if there is only child, funding a retirement lifestyle for the older generation is problematic.

The second fundamental factor as to why the price of sheep and beef land has to crash is that the average sheep and beef farmer is now approaching sixty years of age. We don’t know the exact figure, but we do know with certainty that sheep and beef farmers are getting older. Continue reading →

Posted in Meat Industry, Rural Finance, sheep and beef farms, Uncategorized | 15 Comments

Transforming New Zealand’s sheep and beef industries

Posted on July 31, 2025 by Keith Woodford

A recurring theme in articles I have written over the last year has been the need for more exports. Right now, our exports exceed our imports, with this occurring in each of the last five months. This is good news, but running a surplus of exports versus imports for a few months is not enough. We also have to pay for deficits in our invisibles, plus we have big overseas interest bills on all of our historical overseas borrowings.

The latest current account deficit is $24.7 billion per annum as at 31 March 2025. This has had to be financed by an equivalent inflow of investment capital from overseas. This deficit is a measure of the extent to which our international expenditure on consumption items, including imports of goods, plus invisibles and interest on foreign debt, exceeds our income.

A key measure of the extent of the problem as measured by World Bank data is that New Zealand’s exports have declined from 36% of GDP in 2000 to 24% in 2023.  This percentage is now well below both the OECD and global average of 29% of GDP. We are lagging badly. Continue reading →

Posted in Uncategorized | Tagged | 4 Comments