New Zealand’s total gross debt continues to expand and break new records. In our annual Nation of Debt series, we tally all the nation’s debt statistics, from across the private and public sectors. This year we’ve hit a grand total of $790 billion. That’s up from $739b last year - a relatively subdued increase of 7 per cent. But while solid GDP growth can keep the international creditors at bay, the bottom line is that we don’t save enough collectively to offset our borrowing needs. “The big issue with that isn’t that debt levels are high overall,” says ANZ senior economist Miles Workman. “It’s that New Zealand isn’t very good at saving.” But there is some good news in the latest figures - especially if we park the pandemic-fuelled blowout in public debt. It’s no secret that the massive scale of government stimulus through the pandemic has seen core Crown borrowing surge in nominal terms. It was up another 17 per cent in the year to May 30 - to $193.63b. Meanwhile, we can take some comfort in the fact that the in past year, the growth rate in private debt has been the most moderate since at least 2016. The economic cycle has turned and the stimulus-fuelled pandemic boom is over. As the Reserve Bank has lifted the official cash rate the cost of borrowing has risen and we have borrowed less. That is a sign that the system is working and RBNZ monetary policy is doing its job to reduce the money supply and curb inflation. “So far we haven’t actually seen any contraction in that lending appetite and think it partly reflects that the banks are well-positioned with plenty of capital and liquidity. That ensures they can maintain credit availability.”  The growth rate for business lending has declined from 9 per cent two years ago to just 3.4 per cent. That’s only sort of good news. Business is one area where higher debt can be positive as we want to see businesses borrowing to invest in new capital to expand and improve productivity.  Broadly though, both for business and agriculture debt is declining as a percentage of GDP.  “That makes business more robust and resilient to higher interest rates and slower economic activity”. On aggregate, the big picture there is that both households and businesses are in a relatively good position - for the vast majority.  (ICE SYDNEY)

Fonte notizia: NZ HERALD