So what can New Zealanders look forward to in 2022?
After what PM Jacinda Ardern has labelled an “incredibly hard year” , surely the path ahead is smoother.
Don’t bet on it, even though the PM reckons our economic recovery is outstripping that of Australia, Canada, the European Union, Japan, and the OECD.
She told Parliament on its last sitting day that export forecasts were at a record high, as were milk pay-outs to farmers, and the terms of trade were positive.
Further, she said:
“A statistic that represents people’s livelihoods and their overall financial wellbeing is that we have seen unemployment down to record lows of 3.4%. And for every person that has stayed in work or has moved into work, that represents thousands and thousands of employers, business owners, business start-ups all working hard to support one another and their staff. It has truly been a team effort.
“But those numbers are also recognition of the hard work, foresight, and passion of this country’s finance Minister and Deputy Prime Minister, and I pay tribute to you, Grant. On a day when we release numbers that show projected net debt is lower and our return to surplus sooner, we say thank you”.
With those words ringing in their ears, New Zealanders, surely, can indulge in some real Christmas cheer?
Maybe, but there could be a deeper-than-usual hangover.
Not just from Omicron — keeping that at bay is still very much more than just a headache — but from inflation and other economic pains.
“Societal happiness”—one of the goals of the Ardern government—is proving as elusive after four years with Ardern at the helm, even though she claims (on child poverty) that 109,000 families are now on average $175 better off a week because of what her government has done and 40,000 children have been lifted out of poverty.
“On housing, we’ve now added 8,700 extra housing places; 3,100 extra transitional homes. And consents: consents for new homes have broken record highs for eight months in a row this year. On climate, we have increased our ambition and quadrupled climate aid.
“Because of our clean-car discount, more electric vehicles were registered in NZ in the past six months than for each of the past four years.
“We’ve seen 6.6 m/ tonnes of emissions cut from our industrial process heat sector.
“We’ve quadrupled the Green Investment Fund.
“And just in the last two weeks—just in the last two weeks—you will have continued to see progress on establishing the Māori Health Authority. Minister Marama Davidson released our country’s first ever strategy on family and sexual violence.
“And we’ve taken action to make NZ smoke-free in our lifetimes.”
But according to many authorities, NZ – and, indeed, many parts of the Western World have got themselves in a bind with inflation.
As Keith Woodford writes:
“Getting out of the current mess will be painful”.
Woodford believes the final precipitating factor that has created the current situation is the specific monetary response to Covid-19, but the underlying flawed thinking was firmly in place before that”.
Woodford says there is no painless solution to the current inflationary problem.
“If inflation is to be reined in, then interest rates have to rise. That has potential to take the heat out of inflation, but it is also likely to slow down the overall economy. I see storm clouds ahead”.
So New Zealanders – when they sit down to Christmas dinner should enjoy – every morsel of it.