Mike Hosking: Why Forbes is right and wrong about an NZ recession

Immigration cutbacks will affect the economy - you can't cut the number of students coming to the country without that affecting a $4.5 billion industry.

Beware the views of the foreign press. The latest one this week is from Forbes, which claims we will have a recession under this new government.

It comes off the back of the Washington Post, which claims the alt right is secretly pulling the strings behind the Labour Party. That one, quite rightly, was dismissed as the dribble it was.

It's not unlike a number of reports we get from places like the OECD who don't get the nuances of the New Zealand culture and attitude when it comes to things like housing, so they're sitting in Brussels looking at some sort of spreadsheet, working out that we pay a lot of our incomes on a house, and that surely means there's a bubble and it's about to burst. In reality, no such thing is going to happen.

So what is Forbes saying? Well, the recession will be brought about by the Reserve Bank Act changes, the reduction in immigration, and the ban on foreign buyers.

What makes this piece worth at least thinking about, and vastly more realistic than, say, the Washington Post piece, is that two of those three things are in fact accurate.

I dismiss the Reserve Bank changes. They appear to be limited to focusing on employment, and the bank has already said what most of us had already worked out: it'll make no difference, it's a piece of New Zealand First window dressing.

But immigration cutbacks will affect us. You can't cut the number of students, for example, coming to the country without that affecting a $4.5 billion industry. It's courses cut, it's jobs gone, that's real and there is no escaping it.

Equally, on work visas, the same impact will be felt. We are short of labour, everyone knows that industry after industry is being held back in terms of productivity because they can't hire the right people. Immigration addresses that. Cut that back, it will slow growth.

Same with foreign buyers. I doubt it will lead to a crash, but if you cut demand... follow the dots, none of this is complex.

But deep down, and here's the Machiavellian part of all this, Winston Peters knows it, he knows all this is right, and that's why he told us on that night he picked the government that when the recession comes don't blame us. Remember that part? He's hoping we'll look to a bank bubble in China, or a market correction in New York, so he can point the finger internationally. That stuff may well happen.

But the trick to being resilient to that sort of activity beyond our control is to have your local operation humming. But as Forbes quite rightly points out, meddling with the mechanisms that have delivered success will harm us. It's not like now we haven't been warned.