Time to pull our collective heads out of the sand
Yesterday’s release of Treasury’s Pre-Election Economic and Fiscal Update (PREFU) provides a fairly sobering forecast of our ability to grow wealth in and for New Zealand, say the New Zealand Manufacturers and Exporters Association. NZMEA Chief Executive, Dieter Adam says, “We have to face the reality of our lack of economic development in New Zealand. And now is the right time to challenge New Zealand’s leading parties to tell us what they are going to do to push our economy towards a more prosperous future for everyone.” “For the next four years (2018 to 2021) Treasury forecasts a decline in the rate of absolute GDP growth in 2020 and 2021, with a similar decline in the export growth rate, down to just over 2% in 2020 and 2021. By then we’ll be four years away from the current Government’s goal of growing the share of exports to GDP to 40%, and further away from reaching that goal than ever. “These observations sit alongside our own, and Statistics New Zealand’s data on exports of elaborately transformed goods, which have been in decline for the past 18 months or so. “Treasury’s forecasts for the increase in GDP, as modest as they may be, are still based largely on a growth of labour inputs due to immigration for 2018. After that, miraculously, labour productivity will take over as the main driver of GDP growth. When it comes to explaining what this expectation is based on, given that for the last three years, for example, we saw virtually no productivity growth in our economy, the report remains silent, but states that “productivity growth may be slower than assumed if labour inputs grow more strongly than expected” – meaning if the forecast drop in immigration numbers doesn’t eventuate. “So, what have we actually got here? […]
