Oh goody – our GDP growth rate is solid (but are we envied by countries which enjoy a better standard of living?)

Here  is a  puzzle:   why  are   ordinary   New  Zealanders   not as excited  about the  state  of  their country’s  economy  as  Finance  Minister  Grant Robertson whenever he   talks  about it  in Parliament?.

Surveys have  shown    both  business   and consumer  confidence  sliding  in recent  months.

This  week  Robertson has been citing  reports  from   international  institutions to  contend  everything is  going  swimmingly   for the  NZ  economy despite some  risks, the greatest of  which is a sharp  economic   contraction in China.

But,  hey,  not to  worry, because  “I have huge confidence in the businesses and the workers of NZ that are supported by a government that’s investing in skills, in research and development, in infrastructure”.

To assauge  doubts,   Robertson  pointed to the  OECD’s report – released publicly this week – which said that economic growth in NZ is” solid”.

The OECD  also commended the government for its sound economic management and the Finance   Minister  thought    it is equally pleasing  the OECD’s  recommendations support the policy direction the government is taking, including in the Wellbeing Budget.

The 2019 survey looked at NZ  through a wellbeing frame, with the OECD finding that ‘current wellbeing in NZ is generally high, [with our performance] very good for employment and unemployment,…health, social support, air quality, and life satisfaction.’”

The OECD   did   have   a  concern  over the  domestic  risk  of  a contraction in the housing market, not because it expects one but because of the high levels of indebtedness that have been built up in the  NZ housing market over previous decades.

Again, Robertson applied a  reassuring  balm: this government has a comprehensive housing plan that includes reform of  urban planning systems, building affordable houses, changes to the rules around foreign buyers, and the extension of the brightline test.

As for  the  IMF,  its  report  on  NZ noted a slower rate of economic expansion, but added the near-term growth outlook is expected to improve on the back of government investment and accommodative monetary policy.

The IMF went on to say that Budget 2019 strikes an appropriate balance between supporting policy priorities and maintaining prudent debt levels. NZ’s sound fiscal framework had been further strengthened by the  current government’s approach.

Robertson conceded these international authorities may have some different policy prescriptions from the government,but he is  satisfied  they agree the fundamentals of the NZ economy are strong and  the government’s priorities are focused in the right areas.

So what’s to  worry about then?

Yes,  the rate  of  GDP growth has  slowed.

Does that  have an effect on the day-to-day lives of Kiwis – or their wellbeing?

Well, according  to  Robertson, “we  all know that we need sustainable economic growth in NZ in order to support all of the things that we want for our country”

And here’s the clincher: “We  continue to grow at a faster rate than most of the countries that we compare ourselves to”.

Strange,  isn’t  it,  that those comparable   countries  have  higher living standards  than  NZ.

One thought on “Oh goody – our GDP growth rate is solid (but are we envied by countries which enjoy a better standard of living?)

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