Please, Donald Trump: Fresh petrol pump pain threatens NZ’s fragile recovery – Liam Dann

It might not be as shocking this time as it was in March. There is less reason to fear that we’re actually going to run out of fuel.

But Kiwis will have been feeling the pinch as they fill up their tanks this school holidays, with prices in many places topping $3.50 a litre for 91.

This presents a very real threat to what remains a very fragile economic recovery in this country.

Given that high fuel prices are also undermining Trump’s Republican colleagues in the upcoming US midterm elections, I don’t think he is about to soften his strategy for our benefit.

Quite what his strategy is continues to baffle US political pundits.

Early last week, there were positive signs for oil prices with reports of increased traffic through the Strait of Hormuz.

Oil prices fell below US$100 ($178) a barrel for the first time in a month.

But hopes that this might be the start of something good for the global economy were dashed on Friday. The Wall Street Journal reported Trump had told aides that he expects to start bombing Iran again after the US midterm elections in November.

US officials also told the Journal that an additional 10,000 troops are also being deployed to the region. A third aircraft carrier has also been deployed.

Benchmark Brent crude oil prices immediately rose back above the US$100 mark.

Is Trump about to expand the military operation? Or by the time you read this, will he already have said something to calm markets?

Who knows? Does he?

It seems safe to say he plans to keep the whole world guessing.

But the uncertainty that he sows with this strategy is not good for us.

Last week, Treasury’s better-than-expected pre-election fiscal and economic update (Prefu) served as a kind of official recognition that some sort of recovery is underway.

The economy is still growing ... just.

But confidence in the recovery’s sustainability is the missing piece of the puzzle.

What’s needed is for businesses to start investing for growth – that means hiring, as well as upgrading machinery and technology.

And for businesses to start investing, they need to see that consumers are starting to spend.

This can be somewhat self-fulfilling.

With good export earnings coming from the primary sector and a relatively solid rebound in tourism, there is money in the economy.

So why can’t we just get on with it? Maybe we should all just believe in ourselves.

Or maybe it’s my fault (and the rest of the media) for running negative headlines?

For me, the reason for low consumer and business confidence is that we’ve had the recovery rug pulled out from under us twice in the past two years.

On both occasions, growth was undermined by external factors.

We’ve been expecting this recovery to arrive since 2024. We were all set to “survive till 2025″.

But then in 2025 we copped Trump’s tariff shock. And then earlier this year we copped the big oil shock.

Unfortunately, there is little to no evidence that we are through the worst of the global turmoil.

So it’s not surprising that many people remain sceptical.

ANZ published both its Business Outlook and Consumer Confidence surveys this week.

I take them seriously because, as New Zealand’s biggest bank, ANZ has a large customer base of businesses and consumers to draw on.

Both surveys showed confidence had been grinding its way upwards over the past six months.

But both dipped last month.

The Business Outlook Survey responses are still net positive overall. However, top-line confidence was down two points in September.

Consumer confidence was down just 0.4 points but overall remains a net negative.

On the plus side, ANZ economists noted that while this was still under par, it remained 17 points above its April low.

But what came through markedly in both surveys was that responses turned more negative as fuel prices rose through September.

“Confidence deteriorated and inflation expectations lifted in response to higher oil prices,” ANZ senior economist Miles Workman said.

For the benefit of those who haven’t had to fill up the petrol tank in the past month, petrol prices have risen sharply.

They are up about 20% since the start of September.

This is not good news.

The immediate impact of higher prices is that it takes cash – that might have been spent elsewhere – out of people’s pockets.

The knock-on effect is that it means higher transport costs for businesses and puts upward pressure on inflation more broadly.

That pushes up the likelihood that the Reserve Bank of New Zealand (RBNZ) will have to lift interest rates sooner and higher than it might otherwise have.

As of Friday, markets had odds of an October Official Cash Rate hike (taking it to 3%) at 65%.

That is up from just 30% odds after the RBNZ hiked at the start of September.

That adds to the headwinds facing New Zealand’s recovery and likely further stretches the wait for the labour market to turn in favour of jobseekers.

For all the good stuff in the Prefu last week, it is notable that its forecasts pushed out the labour market recovery.

Treasury now sees unemployment staying above 5% for most of 2027.

I still hope things go better than that.

Anything is possible. Surely the world is overdue for a positive break.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.

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