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.
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.