Vital Statistics
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GDP
(average growth for year to Sep 09)
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-2.2%
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CPI
(Sep 09 incr on Sep 08) |
1.7%
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Current account balance
(year to Sep 09, % of GDP) |
-3.1%
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Unemployment
(Sep 09) |
6.5%
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Employment
(Sep 09 change on Sep 08) |
-1.8%
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Economic Issues
This section presents discussion and articles on economic issues that affects the New Zealand economy.
23 Dec 2009
Yes, I am a bit of a Bah, Humbug type of person when it comes to Christmas. But, I do look forward to December every year for two reasons – cricket and sunshine.
These are the two things that vie for importance in my world next to economics and numbers.
Mind you they are all related.
That is, you cannot have cricket without sunshine.
And, to be honest, sunshine is not really of much use »»
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19 Nov 2009
BERL has been involved in the debate around the role of monetary policy since the RB Bill in 1989. We have argued strongly that the scope of the RB on inflation is too narrow.
There was a select committee inquiry into monetary policy in 2007, to which BERL put in a submission. We then put in a subsequent submission which has been quoted by Phil Goff in an article that suggests Labour »»
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21 Oct 2009
So we are enduring another round of interest rate rises by the commercial banks. ASB was first to move in the latest round, with others following.
The banks have repeatedly cited tight credit conditions, with higher wholesale borrowing rates over the last six months. But consider these points:
The wholesale bank bill reference rate has fallen around 0.55% since April 2009, »»
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03 Sep 2009
BERL Chief Economist Dr Ganesh Nana yesterday presented BERL's submission to the Parliamentary Banking Inquiry into the pass through of short-term interest rates and related issues. Read our submission »»
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30 Jul 2009
The statement accompanying today’s OCR announcement was extremely disappointing. But not surprising.
Yes, there is the very welcome acknowledgement that:
“The level of the dollar in particular, is not helping the sustainability of the future growth, and brings with it additional economic risks."
“The forecast recovery is based on a further easing in financial »»
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16 Jul 2009
One smart way that we can make the best of a recession is to put in place infrastructure that will help us fare better in the next one. Non-residential work put in place, and consents issued, suggest that this is occurring at least to some degree. There are other worrying comments coming from the Reserve Bank, however.
With the CPI at its lowest point in five years, the RB is already talking up »»
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29 Jun 2009
I noted before the Budget announcements that we needed a statement attuned to the needs of the New Zealand economy, and not those of the credit rating agencies. And, as I always told ECON101 students in their first class, economics is about people not about money. So, what did we get from the Budget about people, about money, about the NZ economy, and about the credit rating agencies?
What we got was debt. 34 times. We did get exports six »»
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25 Jun 2009
Much has been heard recently regarding the ‘green shots’ of recovery. We remain unconvinced and continue to believe the global economy will take some time to return to anything near normal.
However, indicators of forward orders, employment and, yes, confidence, suggest the bottom of New Zealand’s recession may well have been reached. But the post-recession forecast is, at best, »»
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01 Jun 2009
Budget 2009 involves borrowing on a scale not seen since the 1980s. The government’s Debt Management Office (NZDMO) will issue more than $8.5 billion in bonds during 2009/10 and a net $36.9 billion out to 2013.
But this borrowing is seen as acceptable, even by the credit rating agencies, given its focus on enhancing the productive side of the economy by improving its infrastructure.
Speaking with officials from the NZDMO, the bond issues »»
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29 May 2009
The Government set out ‘The Road to Recovery’ in its 2009 Budget. The Budget’s three main objectives were:
helping New Zealanders through the recession and supporting jobs
lifting productivity and raising New Zealand’s international competitiveness
taking steps to keep government debt under control.
Budget 2009 had to do more than walk a »»
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29 May 2009
The Budget Forecast indicates that the statistics will show the economy shrank by 0.9 percent in the year to March 2009 and is forecast to contract by 1.7 percent in the year to March 2010. The economy is forecast to start growing again in the year to March 2011 and reach 4 percent in the year to March 2013. Unemployment is predicted, perhaps over-pessimistically, to peak at just below 8 percent »»
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29 May 2009
I noted last week that we needed a Budget that addressed the needs of the New Zealand economy, and not those of the credit rating agencies. And, as I always told ECON101 students in their first class, economics is about people not about money. So, what did we get from the Budget about people, about money, about the NZ economy, and about the credit rating agencies?
What we got was debt. 34 times. »»
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28 May 2009
In its just-released six-monthly Financial Stability Report, the Reserve Bank (RB) provides a comprehensive review of the New Zealand financial system and the problems besetting it from the global credit crisis. The picture emerging from the analysis confirms BERL’s concerns that the currently tight credit situation is unlikely to improve in the near future. In particular, it is likely »»
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25 May 2009
The actual state of the labour market and the economy has been obscured by many commentators’ obsession with the U-word – unemployment.
When the Household Labour Force Survey (HLFS) for the March 2009 quarter was published, many commentators trumpeted the increase in unemployment to 5 percent of the labour force. Some went so far as to opine that it was not as high as expected, and »»
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21 May 2009
Myth #1 – the $50bn recession
To put the recession into context, we now expect the New Zealand economy to permanently lose about $50 billion of output over the three years to 2012, compared with what would have happened without the recession.
Nominal GDP in 2008 totalled $179.8bn. Assume a potential real GDP growth rate of three percent per annum and inflation at two percent per annum. »»
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20 May 2009
Mention the idea of increasing urban density at a dinner party in New Zealand and a look of horror comes across most faces. When people think of “high density” living” or even “higher density” living they seem to envision third-world squatter camps with open sewers, one tap shared among 500 people, and rampant crime.
This is what high urban density is associated »»
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15 May 2009
As the parent of a teenager, with teenage friends and acquaintances, you will understand when I say that sometimes I despair as to the future of the human race. But then I read what passes as economic commentary in some quarters and realise that my despair need not be limited to the observations of teenage behaviour. Let me provide some illustrative examples.
There continues to be regular »»
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11 May 2009
The QV national residential property indices for April released today showed a 9.2 per cent decline in property values over the last year, a slight improvement on the 9.3 per cent decline reported last month. This is the first time the trend in property values has improved since September 2007.
According to QV Valuations spokesperson Blue Hancock this marginal improvement reflects a »»
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07 May 2009
Economists and jargon go hand in hand, and Dr Nana is no exception. He uses economics-speak, but at least in the next breath retracts it.
“We have got to have a strategy. Gosh, I hate that word: ‘strategy’ - a ‘strategy’, a ‘framework’, call it what you like.”
When we first meet he is politely distant, with that faint air of academia. But as »»
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30 Apr 2009
The international situation has improved recently, firstly as a result of the announcement of the US Treasury package to remove toxic assets from the balance sheets of the largest American banks and, secondly by the G20 agreement to abstain from policies prejudicial to world trade. There is a growing sentiment that the world economy may be on the mend.
While we agree that progress has been »»
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29 Apr 2009
Latest data confirms further gloom for those dependent on the spending patterns of New Zealanders and visitors.
After many years of credit-fuelled expansion, retail spending for the year to February 2009 slumped to be 0.6 percent below that of the previous year.
The last time this measure was in negative territory was April 1998. Reinforcing the gloom is the result for total retail sales »»
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24 Apr 2009
Now that New Zealand is being battered by turbulence from the global financial crisis, the new government has set itself the task of developing a “more focused, efficient, and productive public service”. This is being sold as a rebalancing of resources away from bureaucracy and towards ‘front-line’ services. It is also committing itself to a substantial increase in »»
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22 Apr 2009
This piece is not rocket science. All it does is to quantify what anyone with a bit of economic sense already knows. New Zealand exports are driven by two things, or if we’re nit-picky (as the author is in this piece), three.
World prices and world trade volumes (which you could lump together as world trade value)
The relative strength of the NZ$.
How have our »»
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12 Mar 2009
New Zealand needs to look beyond cuts to the official cash rate to save the economy.
A cut to the OCR will make no difference to economic activity in New Zealand. We need to look at other economic instruments to stem job losses, such as the RB printing more money and lending it to Government for worthwhile infrastructure projects.
The New Zealand government, the New Zealand officials need »»
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09 Apr 2009
The RBNZ’s 50 points reduction in its Official Cash Rate (OCR) to 3.0% this month was at the lower end of expectations and in line with indications in its Review in January. It was not in line, however, with the indications in general that the credit crunch was worse than previously believed and not in line with the data contained in its own accompanying Monetary Policy Statement.
Not »»
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06 Apr 2009
We have been diligently investigating all the data we can locate relevant to the prospects for employment in New Zealand. Despite the negative sentiment coming through we cannot find the widely expected black hole in New Zealand employment.
We have been saying for over a year that the employment market is easing, but that employment is resilient and not ‘falling out of bed’. There »»
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18 Sep 2008
The demise of Wall Street institutions Lehman Brothers, Merrill Lynch and the bailout of AIG have sent shockwaves around the financial world. Dr Ganesh Nana from BERL discusses this and other issues in the current economic environment on NZI Business.
Click here to »»
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25 Aug 2008
We hear so much about how far down the OECD rankings New Zealand is these days. So it’s good to finally have an area in which we excel. According to the Purchasing Power Olympic Performance Index (PPOPI), New Zealand produced the best results among the 30 members of the OECD in this month’s Olympic Games. The measure suggests that we performed nine times better than the benchmark »»
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05 Aug 2008
BERL believes that National's plan to fund infrastructure investment from debt is OK, as long as the investment results in improved productivity.
Senior economist Dr Ganesh Nana believes that borrowing for infrastructure is a good theory and that it is carried out by every business in New Zealand.
However, it is important to "nail down" what projects National is intending to spend the money on and to ensure that they add to the »»
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15 Aug 2008
The housing market is sending mixed signals. The number of days to sell continues to rocket, the number of sales has reached a plateau, and sales prices have, to the astonishment of many, rebounded in most markets. Some would like to believe this is the turning point, and that things are on the up again. We would advise caution.
The median days to sell reached 53 over the three »»
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09 Jul 2008
Interest rate policy should change. For the last 20 years interest rate policy in New Zealand has targeted inflation. And finally it is being recognised that the costs of this policy are getting too large. We say finally because Trevor Mallard, Labour’s Associate Minister of Finance, and New Zealand First leader Winston Peters have both said they are willing to look at amendments to the »»
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05 Jun 2008
“Inflation targeting has failed the needs of the New Zealand economy”, was the response from BERL Senior Economist Dr Ganesh Nana to today’s Monetary Policy Statement.
“That the RB, in their forecast, is prepared to accept four consecutive years of negative or nil employment growth is clear evidence that New Zealanders are paying a very high price indeed for the inflation control and targeting focus of economic »»
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05 Mar 2008
Dr Ganesh Nana, senior economist, on Breakfast Business to discuss the OCR announcement and the Reserve Bank's monetary policy statement which is to be released on Thursday.
Click here for »»
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30 Nov 2007
Economics is about choices. Choices are driven by, in part, ambition. So, what are the ambitions of today’s world, or of today’s New Zealand? I raise this question because I am, at times, disheartened by climate change deliberations that focus on the horrendous future facing tomorrow’s generations. How is this predominantly negative focus going to instil the ambition to meet this monster »»
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30 Sep 2007
Yes, inflation is an evil. And, yes, monetary policy is an appropriate tool to combat inflation. But there are also costs incurred in securing a tight leash on inflation. The psychotic fear of inflation is clouding the need to pursue more important economic goals. Indeed, New Zealand’s attitudes to inflation control are actively hindering progress towards other »»
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14 Sep 2007
In its submission to the Inquiry into the Future Monetary Policy Framework BERL encouraged the Finance and Expenditure Select Committee to take note of the costs of inflation control.
“As there is no stated requirement to account for the cost of an over-zealous pursuit of an inflation target, there is no transparent balancing of the benefits of monetary policy actions against the costs of such actions."
“Ideally, we need to be »»
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10 Sep 2007
BERL's submission to the Finance and Expenditure Select Committee stresses the need for other economic policy objectives to also be considered when assessing monetaty policy actions. The present sole focus on controlling inflation is ignoring the costs imposed on other sectors of New Zealand. We urge a transparent weighing of benefits and costs be reported when monetary policy actions are »»
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14 Sep 2007
Is economics a heartless topic? And, are economists really a heartless bunch? Or is that just a characteristic of business and commerce? As a naive, young, economics student I was often confronted with the thought that commerce students were only after $s and had no heart. Many of those confronting me were sceptical arts students. They would invariably profess their allegiance to cerebral matters over those of the »»
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