An economics professor warns New Zealand could move from a cost-of-living crisis into an unemployment crisis as economic activity slows.
It comes after the Treasury forecasted 150,000 people could lose their jobs in the next year.
The Treasury's Budget Economic and Fiscal Update forecast the unemployment rate to rise to 5.3 percent by late 2024, before falling back to 4.8 percent by the end of the forecast period. The current unemployment rate is at near-record low levels of 3.4 percent.
"As economic activity slows, labour market conditions will deteriorate," it said.
The Treasury also predicted wage growth will decline, from a peak of 7.4 percent in September last year to a more moderate 4.2 percent by mid-2027.
Massey University associate dean Māori and economics Professor Matt Roskruge noted while 5.3 percent is a huge unemployment rate, it will largely depend on what happens overseas.
"Quite possibly we will come straight out of a cost of living crisis into an employment crisis," Prof Roskruge told co-host Rebecca Wright on Newshub Nation's political panel.
He said this could be a real concern because, for Māori, quite often the unemployment rate sits at twice of what the headline figure is. Therefore, New Zealand could be looking at 10 percent unemployment among Māori.
NZ Herald's Wellington business editor Jenée Tibshraeny was optimistic about the unemployment forecast.
Tibshraeny told Newshub Nation if the Reserve Bank keeps interest rates higher for longer, which it is forecasting, it causes less economic expansion and therefore more unemployment.
But, on the other hand, Tibshraeny said more money in the pipeline for capital expenditure, as announced in the Government's 2023 Budget, creates more jobs.
"In many ways, that's countercyclical… [with] economic downturn expected, more expenditure sort of props things up a bit."
But Auckland Business Chamber CEO and former National leader Simon Bridges disagreed. He questioned whether there is enough money to fund the Government's infrastructure projects such as Auckland's light rail and the Waitematā Harbour Crossing.
"We've got the rebuild money, that's great… How much is there actually for capital improvement?" Bridge said.
"Personally, I have my doubt on the numbers."
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