The PM won’t talk about grim GDP estimates – but she’s keen to discuss favourable fiscal projections

Asked if she stood by all her government’s statements and actions at Question Time in Parliament yesterday, the PM assumed she would be grilled about COVID-19 and went on the front foot.  Yes, she did stand by her government’s statements and actions,

… especially the proactive work we are undertaking in response to COVID-19, including border measures, requirements around self-isolation as part of our pandemic plan, and public health messaging. They are just some of the measures that we are undertaking to ensure New Zealanders are kept healthy and well.

Fair enough – but Opposition leader Simon Bridges was thinking about the country’s economic health.  He next asked if the PM was worried that

 … the Reserve Bank estimates GDP growth was just 1.6 percent in 2019, the lowest since 2011?

We suppose he was referring to data in the Reserve Bank of New Zealand’s recently published Monetary Policy Statement, which contained a troubling expectation that GDP (production, March quarter to March quarter) would slump from 3 per cent in 2018/19 to 1.6 per cent in 2019/20, climbing back to 3.4 per in 2020/21,  then dropping to 2.2 per cent in 2021/22 and 1.9 per cent in 2022/23.

If Jacinda Ardern is worried, she wasn’t willing to say so.

Instead, she took off on a tack that brought COVID-19 into her considerations:

As the member will well know, looking globally at the moment, we are seeing estimates from the likes of the OECD and others around the likely impact of COVID-19 on the global economy, and, of course, the impact for New Zealand will be no different in that regard.

The New Zealand economy, though, is well placed to weather what we are about to experience and what we are experiencing. For instance, we obviously have low debt—lower than what we inherited—our unemployment rates are low, and we have run Budget surpluses. We are ready for what is in front of us and that’s exactly what we’ve always prepared for.

Bridges persisted:

Why was GDP growth just 1.6 percent in 2019 when our terms of trade were at record highs and coronavirus hadn’t in any way affected the economy by that stage?

Good question.

The PM ducked it by declaring a preference for talking about actual figures rather than estimates, including (it would seem) estimates included among the RBNZ’s latest forecasts.

Rt Hon JACINDA ARDERN: The member is raising estimates and I would rather talk about the facts. Of course, to date, New Zealand has, relative to other countries, fared very well. At 2.7 percent growth relative to some of those that we compare ourselves to—Australia, Japan, the UK—New Zealand has performed well.

We are obviously moving into a different phase where there is going to be a period of global impact on the global economy and time will tell what that will look like in New Zealand. But as I said, we are well prepared for what is coming our way.

Hon Simon Bridges: Does she dispute the Reserve Bank’s latest figure of 1.6 percent growth in the 2019 calendar year; and if she does, what’s the correct figure?

Rt Hon JACINDA ARDERN: I’d merely point out it’s an estimate.

Maybe. And maybe the actual figure will turn out to be – let’s say – 1.9 per cent.

That’s still a hefty decline from 3 per cent over a 12-month period.

Bridges tried again:

Does she accept that the decline in GDP growth to the lowest level since 2011 means New Zealand is not as resilient as we should be to manage the economic impact of coronavirus?

Rt Hon JACINDA ARDERN: I absolutely reject that. In fact, I look to some of the statements that have been made in recent times about New Zealand’s current position, particularly as we look to weather the global storm of the impact of coronavirus.

And as Cameron Bagrie said last week, the good news is New Zealand has good momentum into turbulence. You want good momentum into challenging times; it helps ride them out.

And as I’ve said, we have been well placed: net debt at 19.5 percent. We inherited it at 22.9 percent.

Unemployment at 4 percent; it was over 4 percent when we inherited this economy.

And of course, we have run Budget surpluses, which also we’ve consistently said were for precisely these moments in time. We are well prepared and we are well placed.

Bridges was not ready to give up;

Does she accept if New Zealand was growing at 3 to 4 percent a year as we were before she became Prime Minister, then the economy would be better positioned to handle the economic effect of coronavirus?

Rt Hon JACINDA ARDERN: If the member is trying to assert that we would be in a better position under National, they don’t need to make an estimate; they just need to look at the facts.

The facts were that debt was sitting at 22.9 percent, that unemployment was over 4 percent, that wage growth was lower than it is now, which has reached some of the highest levels we’ve seen in the last 10 years at 3.6 percent.

No matter what measure you use, we are better placed now under this Government than we were under the last one. And that means we are well prepared to deal with what we are now heading into, which is a global impact from COVID-19.

I would also want to reflect to this member that this is a time when New Zealand is about to run into a turbulent storm and it would be helpful, I think, for the member not to talk down New Zealand’s situation right now.

Then Bridges cajoled the PM into demonstrating that – hurrah – yes, she is willing to talk about estimates if they are called something else, such as projections.

Hon Simon Bridges: Does she accept that New Zealand would be in a better position to manage coronavirus if the Government hadn’t plunged the books back into deficit within just two years?

Rt Hon JACINDA ARDERN: We have run surpluses in the order of $13 billion. We are projected to run surpluses in the order of $12 billion. That is exactly why we are prepared to weather this storm we are now facing off the back of COVID-19. The facts for the economy speak for themselves and the economists are reflecting that we are well placed because of decisions made by this Government.

Ah.  The government is projected to run surpluses and Ardern is willing to use data that have yet to become “facts” –

But only when it suits her, obviously.

Just as well.  When the election campaign warms up, Ardern is bound to brag about the most politically beneficial projections and forecasts in this year’s Budget.

Fair to say, there is a difference between estimates and projections. An estimate is a certain measure of a random process which usually applies to the current or previous time period (the more strict definition is here). In contrast, a projection refers to a future time period.

But it can be considered “an estimate of the future” based on past data.

2 thoughts on “The PM won’t talk about grim GDP estimates – but she’s keen to discuss favourable fiscal projections

  1. For God’s sake Ardern does not know what GDP is?
    She has never seen a GST return and thinks a reconciliation is bringing in another Islamic family for reunification!
    She epitomises the noun “Loser”, as does her band of unelected leeches masquerading as politicians.

    Like

  2. Reblogged this on The Inquiring Mind and commented:
    Ardern was in my view the loser in this exchange with Bridges, but unfortunately it will not be given any prominence by the Ardern fan club in the media

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.