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Dr Bryce Wilkinson: New Zealand’s economy a shadow of its former self

Paul Bloxham, HSBC’s chief economist, once described New Zealand as a “rockstar economy”.


That was back in January 2014.


Today, there is nothing “rockstar” left about the New Zealand economy, unless you have Ozzy Osbourne in mind.


For more than three decades, the Swiss Institute for Management and Development (IMD) has compiled annual rankings of competitiveness for 63 of the world’s most important countries. It makes for sobering reading for New Zealanders.


Back in 2017, New Zealand ranked #16 - ahead of Australia at #21.


Five years on, New Zealand has fallen to #31, while Australia is now ranked #19.


A closer look reveals the factors behind New Zealand’s plummeting ranking.


Over the past few years, we have plunged in economic performance, falling from 22nd to 47th place. Government efficiency has also deteriorated markedly from 7th to 17th place.


That’s not a record for this government to feel proud of. And it gets worse.


Altogether, the IMD’s ranking comprises 25 subcategories. In eight of them, New Zealand finds itself in the bottom half of all countries. And these are the categories that really matter: domestic economy, international trade and investment, inflation, productivity and efficiency, attitudes and values, and technological infrastructure.


The IMD noted New Zealand going in the wrong direction on subsidies, inflation, tourism, brain drain, public finances, skilled labour, competent senior managers, and central bank policy.


As shocking as it is to see the IMD’s assessment, if we are honest, none of this should surprise us.


We know that our public finances are not in good shape.


We have observed the erratic behaviour of the Reserve Bank.


We are watching the onset of a new brain drain to Australia and the rest of the world.


We have seen how Covid has decimated our once thriving tourism industry.


And we feel the effect of inflation every time we fill our cars or do the weekly shopping.


Where the IMD’s competitiveness ranking holds up an external mirror to us, Westpac’s Consumer Confidence Survey, released this week, shows that Kiwis also understand how dire our economic situation has become.


Consumer confidence in New Zealand now stands at the lowest level since that survey began in 1988. And, perhaps most damningly, for the first time, a majority has a negative 5-year outlook on the economy.


These are not just signs of a small downturn. These are signs of a former rockstar in a policy-induced coma.


Bryce is a Senior Fellow at The New Zealand Initiative, and also the Director of the Wellington-based economic consultancy firm Capital Economics. Prior to setting this up in 1997 he was a Director of, and shareholder in, First NZ Capital. Before moving into investment banking in 1985, he worked in the New Zealand Treasury, reaching the position of Director. Bryce holds a PhD in economics from the University of Canterbury and was a Harkness Fellow at Harvard University. He is a Fellow of the Law and Economics Association of New Zealand.

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60 commenti


Will polished greenstone meet the gold standard?

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John Hurley
John Hurley
24 giu 2022

We have seen how Covid has decimated our once thriving tourism industry.

................................

Try working in it. [ ]

The distinctive feature of the New Zealand economy is that land is an important input into the productive process. This is obvious with the agricultural, fishing and forestry sectors but it also applies to international tourism. In a simple model of the New Zealand economy where the supply of land is fixed, and New Zealand’s isolation means it is not a ‘natural’ location for the production of a broad range of internationally traded goods and services, then an increase in the labour supply through large scale immigration will reduce the marginal product of labour. As a result:

 Real wages wil…


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Kloyd0306
Kloyd0306
23 giu 2022

The trend in polling suggests that Labour will be out while still able to cause immense damage between now and the next election.


And the change, by default, will be that te reo Luxon and a bunch of spineless wokesters will be running the country.


It's not much of a change and a pathetic choice.


Where is the politician who will take off a shoe, pound the lecturn and tell the country we need to get a grip!


The namby-pamby National people are not the answer.


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Risposta a

You offer up nothing other than an observation so probably you should continue to vote for ????? The McGillicuddy Serious Party.

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Andrew Cornwell
Andrew Cornwell
23 giu 2022

if we applied as much rigour to economic performance as we do to the All Blacks we would be way much better off.


A few years ago we thrashed the Springboks 57 to nil. There were still comments on how we could do better.


But we seem to be happy at being crap at having a strong economy and demanding the best.

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Risposta a

"But we seem to be happy at being crap at having a strong economy and demanding the best. "


And ardern soars in the polls personally so I'm not sure success is what many aspire to any more. She may be on a downward slide but 30 odd percent still believe labour is the way forward.

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Richard Seager
Richard Seager
23 giu 2022

I think that the Labour Party should resign.


So that we can start dealing with that sellout Luxon.

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Risposta a

Somehow the gremlins got my reply to you and it has gone.


Basically you need to ignore the media who are nothing more than labour's pr department directed from the beehive on a weekly basis. Take whatever they report with a grain of salt.


Sign up for National;'s emails and read their website from time to time.


Luxon is far from perfect but our country will prosper again, it will just take a while to rid us of the ardern stain.

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