New Zealand’s GDP slipped by 0.9% in the June quarter.
The larger-than-expected drop prompted calls for Willis to step down from her role as finance minister. Despite this, Prime Minister Christopher Luxon continues to express his complete confidence in her.
“Nicola Willis is the best finance minister New Zealand is ever going to have. She’s an outstanding person; she’s an exceptional finance minister and economic growth minister,” Luxon said.
“She’s doing an exceptionally good job in a very tough situation, and I totally back her.”
Former finance minister Roger Douglas and University of Auckland Matthew Abel chair of macroeconomics, Robert MacCulloch, were among those urging her to resign. Labour finance spokesperson Barbara Edmonds criticised the government’s efforts to control the economy as “not good enough.”
Meanwhile, Luxon explained that as a small trading nation, New Zealand is highly vulnerable to fluctuations in the global economy and that US President Donald Trump’s tariffs had undermined confidence both internationally and domestically.
“There’s uncertainty, and as a result, businesses don’t invest, and people don’t spend their money.”
He said the GDP figures reflect past performance and expressed optimism that the economy will strengthen in the upcoming quarter.
Roger Douglas and Robert MacCulloch said Willis was driving New Zealand towards bankruptcy by failing to control the rapidly increasing fiscal deficits and public debt.
“Her own Treasury contradicts her claim that NZ is on a path to surplus. It is not. Treasury’s long-term fiscal forecasts show out-of-control deficits due to pensions and health-care spending from an ageing population,” they said.
“Willis is not up to the job and is not levelling with the New Zealand public.”
Prime Minister Luxon dismissed these criticisms as “absolute rubbish.”
He underlined the government’s economic achievements since coming to power, including the recent declines in New Zealand’s inflation and interest rates, as well as the successful negotiation of a free trade agreement with the UAE.
Willis said New Zealand’s economy “had the stuffing knocked out of it” when Trump’s tariffs on New Zealand exports came into effect.
“The second quarter of the year started the day before United States tariffs were announced.
“The economy had been growing strongly in the previous six months… I feel for people and businesses who have been affected.”