economic recovery

PHOTO: Cameron Bagrie on The AM Show. Images – Getty Images/The AM Show

While the Government has crowed about its success in keeping the economy afloat during the biggest crisis of a generation, not everyone’s benefitting.

Household wealth is on track to increase $800 billion in just two years thanks to ballooning asset prices. It increased $402 billion in the year to March 2021, rising almost as much in 12 months as it had in the previous four years put together.

And it’s on track to do the same again, economist Cameron Bagrie told The AM Show on Tuesday.

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“By any benchmark, that is absolutely off the charts. You’re talking numbers here that are around two times the size of GDP or the general economy.”

The result – at least for those who own property and other assets inflating in price thanks to the Reserve Bank’s record-low interest rates – is they feel richer and are more likely to spend, which Bagrie says “has been a pretty big part of getting the New Zealand economy back on track”.

“The worry is that… the massive dichotomy between the haves and the have-nots. We’ve got what’s called the K-shaped recovery. Some parts of society, if you’ve been on that property or asset price ladder, you’ve benefited tremendously from low interest rates and asset prices moving up.”