NZ economy must remain nimble and agile, says Robertson – but then NZ went into lockdown and a hobble was applied

It   seems   an aeon  ago,  but it  was  only  last  week that  New Zealand’s wellbeing-focused government was  contemplating   how  to connect the country safely   with the rest  of the  world.   Now, achingly,  the  question is how  long the  lockdown  will last.

Whereas  last  week   the  headlines (like   this one from Newsroom) chorused “Covid success  weighs on Ardern’s  shoulders”, feelings among the  team  of  5 million might now be  deepening over why  such  a  relatively  small percentage  of  the population  is   fully  vaccinated. 

Or  why  the  elderly, in particular, are  not  queueing  for  booster  shots.

NZ,   by  some counts, has  had the slowest  vaccination rollout in the developed world.

The  PM’s  insistence that her government’s Covid response and recovery path has been dictated by the “best evidence we have about how to protect people’s lives and livelihoods’’  accordingly rings  a  bit  hollow.

We  might  to  have to  wait  to  get the true   picture,  not  just on  the  mood of the   nation,   but  also on what damage  the  Covid Delta  variant outbreak will  do  to  the  economy.

Only   last  week  Finance Minister Grant  Robertson  was   telling  Parliament the government’s efforts to secure the recovery are being reflected in the jobs market.  

He  cited ANZ’s confidence composite gauge, which is a GDP growth indicator by combining lag business expectations and intentions with consumer sentiment, as being well above pre-COVID levels.

Robertson  added that the primary sector is continuing to support and secure the recovery. The ANZ Commodity Price Index  had eased back from its record high, declining by 1.4% in July,  but “ it is still very strong”.

On the employment picture, Robertson said that for  the fifth month in a row, the SEEK NZ employment report shows a record-breaking number of jobs advertised, with job ads increasing by 2% in July from the previous month. For the year, job ads rose 88% while job ad numbers are now 27%  above pre-COVID highs.

“Unemployment has fallen to 4%, reflecting the stronger than expected economic activity and an economy operating above pre-COVID levels”.

Robertson    appeared   to  savour NZ’s  success  by  contrasting  it  with the signs of a moderating pace of growth at above-trend levels in the OECD area.

“The latest indicators point to signs of a moderating pace of growth in the US, Japan, and Canada. Similar indications have emerged in the UK and in the euro area as a whole, including in Germany and Italy. In France, there are also signs of a moderating pace of growth with its indicators still below trend”.

He  concluded  that all of  this 

“… indicates that the NZ economy operates in a very uncertain and volatile global context and in one in which it’s important that we remain nimble and agile”.

The  length  of  the  lockdowns   could put  a  bit  of  a hobble  into   that  agility.

Given  that  elements  of  the  tourism  industry  already  struggling    to   survive   might be  delivered   a  death  blow  by  the  latest  lockdown along  with  the   burst  Trans-Tasman  bubble ,   Robertson’s  celebration  of  NZ’s  unemployment  rate  touching 4%   might  be  premature.

Critics  who   have looked  closely   at  the unemployment  statistics   have    noted   some  other  worrying   trends:  for  example, rises   in  the  number  of  young  people  not  in  employment, education   or   training.  There  have  also  been increases  of  those  on  jobseeker  benefits.         

For   many  New  Zealanders it  is  baffling  that  at the same time as industries  are  desperate  to  find  workers,  the number of  people  on benefits  (including  the  jobseeker  benefit) is  40,000  higher  than before Covid  struck. 

Another  concerning  trend in  the  labour market, as  measured  by  Statistics  NZ, is  the  “under-utilisation”  rate,  which in the official  jargon gives  “a  broader measure of  untapped  capacity”. It  stood at 315,000, or  10.5% of the  workforce,   in  the June  quarter.   

Still,  New  Zealanders   can  rely   on  Robertson   to punctuate  the  encircling  gloom   with  some  rays of  light  even as the  lockdown  ominously heads  for  further extensions.