Why this year was better and worse than expected - Liam Dann

Inflation, cyclones and politics - an entirely unreliable 2023 year in review. Graphic / NZ Herald

OPINION

Merry Christmas. This is my end-of-year column. It’s a two-parter though, because this year we sneak in one more Sunday before Christmas.

I’m sorry but I don’t think I’ve got another serious one about GDP and inflation and interest rates left in me.

You know how it goes... it was worse than expected but then it was better than expected but then it was worse again, but the thing that was worse means the other thing we were worried about might be getting better - which is nice. And around we go.

How about that Government though? They probably made it worse... or they will make it worse. You can pick the tense of that sentence to suit your own political persuasion.

Which Government? Well, all of them and none of them.

Don’t count on the Government is my advice, especially don’t count on the Government if you don’t need to because there are plenty of people out there who do need them.

So anyway, this is the end-of-year special.

As is traditional in newspaper etiquette, the year in review goes first. Next week I’ll have a go at predicting 2024.

2023 the year in review

January:

We’ve spent the past 75 years worrying about computers taking over in science fiction. At the start of the year, thanks the the arrival of Chat GPT, we let out a collective ”oh no” as we realised it might be actually happening. In January, I asked Chat GPT to write me a joke on economics. “Why did the economist cross the road? To get to the other side of the inflation rate!”, it said. Hopefully, I’ve got a job for a while yet.

February

Just when we didn’t need another economic shock, we got Cyclone Gabrielle. For those of us not in the firing line, it is easy to move on from disasters. But on the East Coast and in parts of Auckland (where we’d just had the big January floods) many are still dealing with it. And we′re all still paying. From an economic point of view. The timing was terrible, blowing another multi-billion-dollar hole in the Crown accounts and adding to inflation as fresh food prices spiked.

March

A lot of 2023 was spent waiting for a recession that never seemed to quite arrive. In March a whole round of economic data came in suggesting, inflation aside, things were holding up pretty well. I was already tired of waiting and wrote: “It seems like we’re all braced for this downturn. We’ve read the newspaper headlines (or written them in my case). It just hasn’t arrived yet. Well, stay braced I guess. Something’s got to give.”

Well, it sure did.

April

How many? In April the stats started to arrive pointing to what has turned out to be the biggest wave of inbound migration in New Zealand history. We took in 173,000 long-term arrivals in the year to October for a net gain of 128,900. After Labour’s original policy to tighten up on migration, was this the biggest U-turn in political history I asked? Well, maybe. They did pivot after intense pressure from businesses to relieve labour shortages. But let’s not forget our borders were closed for two years. In hindsight and looking at what’s happened in Australia, we can notch a lot of this up to a post-Covid rebound.

May

In May we got what turned out to be the last Labour Party Budget for this era. I described it as one of the most radical in 30 years because it didn’t deliver the kind of austere fiscal response that has become the orthodox response to inflation. Should they have cut spending harder? Would it have helped ease inflation more quickly? Probably, but at what cost? In the end, it was a cost voters decided we needed to confront. Of the things Labour misread about the electorate, just how much Kiwis hate inflation is probably top of the list.

June-July

Recession finally arrived, earlier than economists expected. Stats NZ data put the first quarter of the year in negative territory. Headlines turned dark, Opposition politicians sharpened their economic attack and people braced for the worst. Then the numbers were revised and it turned out we weren’t in recession after all. The economists didn’t cheer up though, sticking with forecasts that the recession was still to come.

August

Pre-election tensions took off in classic low-brow Kiwi style. Nicola Willis and Winston Peters accused Grant Robertson of hiding a multi-billion-dollar hole in the fiscal accounts. Speaking in Parliament she accidentally abbreviated her question to ask of the then Finance Minister: “How big is his hole?”

September

Spring arrives and with it more horrible weather, and another state of emergency (in Gore). The weather has been a shocker in 2023. It’s almost as if the climate has changed.

October

We were robbed. What is the point of using replays and a TV match official if they can’t get the technical stuff right? It was a try and it would have turned the tide of the game. Also, there was an election but that was pointless too as we didn’t get a result until November.

Deputy Prime Minister Winston Peters has already grabbed the limelight since helping to form the new Government. Photo / Mark Mitchell

November

Winston Peters wins the election.

December

“Brace yourself, things are about to get ugly,” read the headline for my column of December 3. Look, I predicted something! Well, really who didn’t? The sharper downturn in the third quarter was a bit of a surprise but really it was just a timing issue. We’re almost certainly into recession now. To me, it is a correction we always had to get through - sooner or later.

There was no way to avoid paying the toll that the global pandemic took. Many things could have been done better but I’m still glad we chose to pay it with money instead of bodies.

And so...

The going will get tough as we head into 2024. How tough? Tune in next week to find out exactly what is going to happen in 2024.

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.