Friday, 19 August 2022
Meet the JournalistsPremiumAucklandWellingtonCanterbury/South Island
CrimePoliticsHealthEducationEnvironment and ClimateNZ Herald FocusData journalismKāhu, Māori ContentPropertyWeather
Small BusinessOpinionPersonal FinanceEconomyBusiness TravelCapital Markets
Politics
Premium SportRugbyCricketRacingNetballBoxingLeagueFootballSuper RugbyAthleticsBasketballMotorsportTennisCyclingGolfAmerican SportsHockeyUFC
NZH Local FocusThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay of Plenty TimesHawke's Bay TodayRotorua Daily PostWhanganui ChronicleStratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu Courier
Covid-19
Te Rito
Te Rito
OneRoof PropertyCommercial Property
Open JusticeVideoPodcastsTechnologyWorldOpinion
SpyTVMoviesBooksMusicCultureSideswipeCompetitions
Fashion & BeautyFood & DrinkRoyalsRelationshipsWellbeingPets & AnimalsVivaCanvasEat WellCompetitionsRestaurants & Menus
New Zealand TravelAustralia TravelInternational Travel
Our Green FutureRuralOneRoof Property
Career AdviceCorporate News
Driven MotoringPhotos
SudokuCodecrackerCrosswordsWordsearchDaily quizzes
Classifieds
KaitaiaWhangareiDargavilleAucklandThamesTaurangaHamiltonWhakataneRotoruaTokoroaTe KuitiTaumarunuiTaupoGisborneNew PlymouthNapierHastingsDannevirkeWhanganuiPalmerston NorthLevinParaparaumuMastertonWellingtonMotuekaNelsonBlenheimWestportReeftonKaikouraGreymouthHokitikaChristchurchAshburtonTimaruWanakaOamaruQueenstownDunedinGoreInvercargill
NZ HeraldThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay Of Plenty TimesRotorua Daily PostHawke's Bay TodayWhanganui ChronicleThe Stratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu CourierVivaEat WellOneRoofDriven MotoringThe CountryPhoto SalesNZ Herald InsightsWatchMeGrabOneiHeart RadioRestaurant Hub

Advertisement

Advertise with NZME.
Business

Liam Dann: Return of the rock star economy the right time to tackle inequality

11 Sep, 2016 06:34 AM4 minutes to read
Dairy prices are up, GDP forecasts are strong and your house is worth $1 million. So why the economic gloom? Liam Dann talks to economists Cameron Bagrie and Christina Leung about the sense of unease overshadowing New Zealand’s recovery.

Dairy prices are up, GDP forecasts are strong and your house is worth $1 million. So why the economic gloom? Liam Dann talks to economists Cameron Bagrie and Christina Leung about the sense of unease overshadowing New Zealand’s recovery.

Liam Dann
By
Liam Dann

Business Editor at Large

VIEW PROFILE

This Thursday GDP figures are expected to show the New Zealand economy grew by at least 3.5 per cent in the year to June 30.

ASB's economists are picking it to be as high as 3.7 per cent.

"We expect GDP lifted a whopping 1.2 per cent over the June quarter, led by construction, manufacturing and retail activity," ASB senior economist Jane Turner writes in her preview.

That will be a stunning result for an agricultural economy that has just been through one of the most dramatic dairy price slumps in living memory.

Advertisement

Advertise with NZME.

It's hard not to draw the conclusion that the rock star economy is on the comeback trail - at least in the terms that the catch-phrase was originally coined by HSBC economist Paul Bloxham.

That is to say, relatively speaking.

New Zealand currently has one of the highest growth economies compared to peers in the Western developed world.

The country hasn't had a recession in eight years now.

Australia's economy has just rebounded to 3.3 per cent annual growth.

The bounce in dairy prices of the past few weeks - moving things out of financial disaster territory at least for most farmers - will only add to the confidence to New Zealand's outlook.

Related articles

Business

NZ's 'rock star' status dims

19 Aug 12:18 AM
Business

Are we still a rock star economy?

17 Feb 11:28 PM
Business

NZ dollar jumps to high, weak US data

06 Sep 08:46 PM
Business

Good times roll as economy picks up

08 Sep 06:13 AM

We saw in on the currency market last week as the kiwi surged to US74.5c - a 16 month high - and also lifted above A97c.

"The surge in Q2 growth will be led by the construction sector, manufacturing and retail activity. Unusually strong exports will also contribute to a temporary boost to Q2 growth, led by large lifts in meat, dairy, kiwifruit and oil exports," ASB's Turner notes.

Advertisement

Advertise with NZME.

There's no doubt the strong economic growth is also being underpinned by record net migration gains.

But as NZIER senior economist Christina Leung points out this still generates positive momentum for the wider economy and is certainly preferable if you consider the opposite - economic contraction due to population decline.

The hope would be that the momentum created is sustained as net migration growth flattens out.

At that point we will start to see an increase in GDP per capita.

Is it sustainable?

Though ASB expects we could see some weaker growth as some of the drivers come off peaks it sees the trend as sustainable.

Advertisement

Advertise with NZME.

ANZ economists have noted their business confidence survey suggests may push on towards four per cent next year.

This will help the Reserve Bank find some of the long lost inflation pressure it needs to get back on target.

But at this stage no one sees any reason why they won't cut rates at least once more this year - probably in November.

Regardless, talk of strong economy will anger some those dealing with what appears to be a rise in inequality and poverty at the bottom of the social scale.

It should be a cause for concern.

It's a point worth repeating that the growth we are seeing in this cycle is not helping to level the economic playing field.

Advertisement

Advertise with NZME.

The low inflation, low interest rate environment continues to underpin an asset boom which is benefiting home owners and share market investors but risks leaving behind a sizable chunk of the population.

Talk about the return of the rock star economy shouldn't be treated as reason to relax about these issues.

Quite the opposite.

Times of stronger growth and stability are the right times to tackle fundamental economic problems.

This is should be an opportunity for the Government to focus on measures to boost productivity and wages.

At the very least the improved outlook should surely remove any political excuses for not doing more to tackle inequality which is concerning so many New Zealanders.

Advertisement

Advertise with NZME.

Advertisement

Advertise with NZME.

Latest from Business

Business

New meme stock victim: Bed Bath & Beyond tumbles

18 Aug 11:19 PM
Premium
Business

What to expect from Chorus' earnings

18 Aug 10:24 PM
Premium
Business

Turkey shocks with unorthodox stab at scorching inflation

18 Aug 09:47 PM
Business

Winton forms new $200m business with Australian lender

18 Aug 09:34 PM
Business

SkyCity refutes Adelaide sale speculation

18 Aug 09:29 PM

Most Popular

Mid-air horror: Panic on Air NZ flight from LA as masks drop, emergency declared
New ZealandUpdated

Mid-air horror: Panic on Air NZ flight from LA as masks drop, emergency declared

18 Aug 10:55 PM
Live: 400+ Nelson homes evacuated; Far North town isolated after slips
New Zealand

Live: 400+ Nelson homes evacuated; Far North town isolated after slips

18 Aug 10:41 PM
Murder charge after death at property in South Auckland
New Zealand|Crime

Murder charge after death at property in South Auckland

18 Aug 09:43 PM

Advertisement

Advertise with NZME.
About NZMEHelp & SupportContact UsSubscribe to NZ HeraldHouse Rules
Manage Your Print SubscriptionNZ Herald E-EditionAdvertise with NZMEBook Your AdPrivacy Policy
Terms of UseCompetition Terms & ConditionsSubscriptions Terms & Conditions
© Copyright 2022 NZME Publishing Limited
TOP