Grant Robertson Warned Against Recession Spend-up
December 15, 2022

PHOTO: RNZ / Dan Cook
ANZ senior economist Miles Workman, speaking to Morning Report after Robertson, said the finance minister would have to be extra careful not to be tempted to use broad fiscal stimulus to avoid a recession.
“If the economy goes into a recession, the government probably shouldn’t be thinking about a stimulus package unless that recession is looking deflationary. Because we’re in this weird economic environment where we could enter a technical recession, but if the labour market remains tight and the wage-price spiral continues through that, that’s not going to change the Reserve Bank’s big problem.”
In other words, if inflation sticks around despite a recession, the Reserve Bank will continue to pull its big lever.
“What the government has to be cognizant of is that it has to be aware that if it provides macroeconomic stimulus, broad stimulus across the whole economy, that might just mean the Reserve Bank has to hike the OCR by more than otherwise, undoing a lot of that good the government’s trying to do.”