Our economy is a wet football stuck in the mud of a rain-soaked field. Photo / Getty Images
OPINION
There’s some fantastic football being played in New Zealand right now.
The Women’s World Cup seems like one of few bright spots in an otherwise dark and dismal winter.
It’s got me thinking in football metaphors, although the spirited play we saw from the Football Ferns last week isn’t much use.
No, we’ll need to leave the World Cup behind and head for a bottom-of-the-table social league to find any decent political or economic analogies.
Our economy is a wet football stuck in the mud of a rain-soaked field.
Politicians on both teams are hacking away at it, without any inspiration or vision.
I’ve never had lower expectations for an election campaign.
That’s saying something given my general lack of enthusiasm for politics.
National is playing quite a negative game. I’m not on TikTok but all the teenagers I know are.
Apparently, the Nats are doing a very good job of convincing young people that New Zealand is now a third-world disaster zone.
“I’m not going to lie, their TikToks really land,” one 15-year-old told me last week. “They make it seem like it’s GTA out there...like the whole country is falling to bits.”
GTA for the record is Grand Theft Auto one of the most popular and most violent games ever made - where the protagonist drives around a lawless and futuristic city carjacking people and trying to rise from “street-level hustler to become a kingpin of your own criminal empire.” (in the words of its official website).
It’s grim stuff.
But they have sucked Labour into the same game now.
The Government’s response has basically been to shut down and play all-out defence.
If it wasn’t for the fact that elections demand a result we’d be odds on for a nil-all draw.
I shouldn’t be too hard on the politicians I guess. They are playing to the crowd. They are out around the country talking to people and their performance reflects the feedback they are getting.
I agree with Christopher Luxon that New Zealand needs to get its mojo back.
It’s a shame that this political game means there’s no chance of that happening until after the election.
I think, at this point, National is likely to win that election.
But given the challenges with the economy, concerns about crime and the generally dismal post-pandemic national mood, the polls remain remarkably close.
I do wonder how well the negativity is really working and how much additional confidence it will suck from the economy in the next few months.
I suppose if we’re still trying to engineer a recession then this gloomy campaign might help with beating down inflation faster.
Economists are still divided on whether we’ve won that fight or if the Reserve Bank will need to lift rates one more time.
There is still some concern about the stickiness of domestic inflation.
But this is really a technical argument about timing.
There is no question that inflation is retreating. The US almost has it back in the box - at an annual rate of 3 per cent.
China’s economy is at risk of deflation. The global trend is clear.
Domestically we’ll see high-interest rates start to take their economic toll in the next six months.
It is getting harder to find work.
But the latest Seek jobs data shows job ad volumes have fallen 3 per cent when compared to May.
The recruitment company’s Employment Report for June showed job ad volumes fell for the third consecutive month, following a 5 per cent decline in May and a 1 per cent drop in April.
Job ad volumes are down 21 per cent year-on-year - albeit coming off record highs.
Applications per job ad rose 10 per cent in June when compared with the prior month, following a 13 per cent rise from April to May.
This all looks ominous.
It looks like the start of the real downturn, the one which many economists expect will deliver a real recession later this year.
Meanwhile, commodity prices continue to fall. China’s economy is struggling to get back to the kind of growth to which the world is accustomed.
The latest Global Dairy Trade Auction delivered another price dip on Wednesday.
Global prices are now off by almost 40 per cent from a peak in 2022.
ANZ has revised down its farmgate milk price forecast for the 2023/24 season by 50c to $7.75/kg milksolids.
“Global demand for dairy products has been impacted by deteriorating economic conditions affecting consumer demand, particularly in China,” wrote ANZ economist Susan Kilsby. “The relatively weak NZD remains supportive of the farmgate milk price, but is not sufficient to offset the impact of lower returns for dairy commodities.”
Slow Chinese growth is a problem for the world. It is an even bigger problem for New Zealand.
So I am more worried about the depth and length of the recession than I am about inflation now.
That’s not to say the Reserve Bank can let up on interest rates yet - it can’t.
We might be able to see the finish line but we’re not across it yet. We have to see this cycle through.
The problem is that if you engineer a recession to rebalance the economy you need to have a plan to rebound out of it.
What is on the horizon to drive growth next year? Another property bubble?
I think that’s where the political leadership comes in.
Hopefully, I’m wrong and this column will be proved far too cynical. Hopefully the next few weeks will see the campaign kick into gear and new policies launched.
Perhaps then the politicians will turn on their A-game.
Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist, as well as presenting and producing videos and podcasts. He joined the Herald in 2003.