People are often surprised when Mary Jo Vergara tells them what she does for a living. At 26, she’s not your typical economist but Vergara, who works for Kiwibank, is passionate about her work, especially since she’s been thrown into the thick of dealing with economic upheaval thanks to the pandemic.
Q: Was being an economist always your dream?
Not at all. I was more interested in history and classical studies, I wanted to work in a museum. There came a point at high school where we had to pick our subjects and when I asked my dad for help, I actually hid economics on the list because I knew he would suggest it. He was a casual observer of the economy, with an interest in political economy. When I was growing up there were always Time magazines with stories about politics and the economy around the house. He said maybe I should give economics a go and I begrudgingly said, “Oh, okay”. Then I found to my surprise that I actually enjoyed it. The theories made sense and seemed to click quite fast with me. It turned out I was good at it, so I went on to do a degree and my masters in economics.
Q: Did you go straight to the job at Kiwibank?
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After I finished my masters I did an economics research consulting job. I was part of a small research team whose focus was on climate change, sustainability and environmental economics. That was really interesting but then my brother saw that there was a job going at Kiwibank in Auckland. I really wanted to apply for it. It’s rare to have this kind of entry-level job in a banking economics team and also for it to be in Auckland, which is where I’m from. Most graduates in economics go to Wellington and work for the Reserve Bank or the Treasury, which is a great way to get into economics, but I was really keen to work for a bank and be in Auckland. I was really grateful to get the job with Kiwibank.
Q: What reaction do you get when you tell people you’re an economist?
Often they’re surprised but I think that’s because of my age. I did go to university quite young so I had a bit of a headstart. I don’t think it’s because I’m female. Traditionally it has been a male-dominated industry but it’s not as much of an issue in New Zealand. Thinking about my class at university, it was relatively balanced in terms of male and female students. It wasn’t like the 1970s when there would only be one woman in a class. I think finance generally has been quite male-dominated but we are starting to see a lot more women in senior executive roles, which is good.
Q: In a nutshell, what is it you actually do?
To put it simply, what I do is try to understand what makes the New Zealand economy tick and use that information to help our clients. That includes looking ahead at what is likely to happen and that can be really difficult, especially in these volatile times. It’s like predicting Auckland weather! Sometimes traders will trade on the picks that we make, such as what we think the next quarter GDP or inflation will be, so there is quite a bit of pressure in terms of trying to get it right.
Because it is difficult to make forecasts in these times, we like to hear anecdotes from clients about what’s happening with their businesses – they have been really insightful in today’s environment. The way things are at the moment, economic data can’t come fast enough so hearing from the frontline about how the economy is doing is really helpful.
Q: Is it an interesting time to be doing this kind of work?
Yes, it is very interesting, as an economist, to see the disruption Covid has had on the economy. I started at Kiwibank in December 2019, and people at work joke that what has happened to the economy is my fault because of comments I made after reading an article in The Economist asking what people were doing back when the GFC happened. I was at intermediate school learning about the GFC, while some of the people I work with today were actually experiencing it firsthand. I said I wondered when I would experience a recession or some kind of major disruption that people would be talking about in years to come, and then Covid happened.
Vergara says we’re now seeing the housing market in retreat. Photo / Fiona Goodall
It’s been kind of fascinating over the course of a couple of years to see our economy go into the deepest recession in our history, then the strongest bounce back in our history, followed by going down again. But you have to bear in mind that it’s not just about the numbers, that what’s happening affects people’s lives. It’s had a very real impact, especially for women. The lockdowns disproportionately affected women in the service sector.
Q: Could anyone have forecast the effect the pandemic had on the housing market?
Our human tendency is to look back at the past to try to figure out where we are headed, and looking back at the GFC would have told us that in the thick of recession, house prices would have declined by 10%. But we had things like the lowering of the OCR (Official Cash Rate), which really changed the situation and that made looking at history irrelevant. So the housing market went up but because of rising interest rates and recent regulatory changes, we’re now seeing the market in retreat.
Q: Why are we so concerned about the real estate market here?
Property does seem to be New Zealanders’ favourite pastime. So much of our assets are tied up in our homes and a lot of people invest in real estate – it’s our retirement fund. So when shocks happen in the housing market, we are vulnerable to them. What you need to be doing, like you would with any other good portfolio, is diversifying your risk. So don’t have all your money in property but look at investing in Kiwi businesses. That would add more value to the Kiwi economy than investing in houses. The pandemic has made us look inwards at the great things we produce in New Zealand and supporting local businesses is a fantastic way of supporting the economy.
Q: Are you positive about the future?
I think so. The outlook over the next 18 months is pretty dim with all these recession risks growing and it will be difficult for a lot of businesses and households, but if they can hold on past that, once we see immigration coming back in, and Covid a bit more stablised and supply chain disruptions resolved, I think our economy will get back on track.
Q: If you could buy your dream home, what would it be?
A home by the water. In the summer I am always at the beach or a lake swimming or paddle-boarding – I find there’s always a sense of calm and tranquillity when I am by water. It would probably have to be a place by a lake so I wouldn’t have rising sea levels to worry about.
Q: What do you do when you’re not figuring out what’s going on with the economy?
When I’m not working I try to make a point of getting out in nature, whether it’s going to the water or for a nice easy hike. I recently did the Omanawanui Track in the Waitakere Ranges, which has re-opened after being closed for a few years because of kauri dieback. The views were spectacular.
I find getting out in nature is extremely good for mental health because it really helps me to recharge and reset. I also like to rewind and reset after a busy week by staying home and watching a good show on Netflix. I recently watched Ozark, which was really good, and now I am eagerly waiting for the last season of Peaky Blinders.
