Archive | Indicators

Exhortation versus analysis

Published 27 August 2018
Does an exhortation beat analysis when it comes from an economist?

I looked at the hope expressed by ASB Bank chief economist Nick Tuffley heading the bank’s quarterly economic forecast report, out today: “Don’t worry, be happy (please).”

And I found it unsettling. If the claims by critics of the Government – largely amounting to allegations of incompetence on the one hand, and support for the failed government that preceded it on the other – are accurate, asking us not to worry is to invite the nation to ignore risks.

And if those claims are inaccurate, the bank’s economists should be able to demonstrate through their analysis what the true state of the economy is and why the criticism should be dismissed.

Mr Tuffley writes: “There is a lot of debate at present about the direction of the economy, particularly given the depths to which business confidence has plummeted over the past 9 months. Our forecasts put us at the ‘cheerleading’ end of the spectrum rather than the ‘Chicken Little’ end. Where will reality end up?”

Surveys versus performance analysis

I distrust most surveys, and the recent spate of business confidence surveys in particular. Assuming a high proportion of business owners & executives would vote National, it’s understandable they would be upset that their party has lost power.

It’s an expectation that your opponents will perform badly. That’s very different from analysis of the effects the new government has had, and is likely to have, on business.

Both Labour’s & National’s 3-term governments ended their days governing to stay in power instead of governing for the common good. Deservedly, they were removed.

There are many very obvious reasons around the world which could cause economies everywhere to turn to custard, led by the US desire to remain all-powerful versus the Chinese desire to expand its power, followed by disagreement between those 2 countries over trade practices, policies & tactics.

At the same time, both countries are opening up opportunities. China’s Belt & Road initiative will lift dozens of countries’ economies, while the Americans see it as a push for power. The US had a one-quarter jump in its economy that followed a quarterly decline. Both countries have serious debt issues.

Equations have more than one side to them

30 years of neoliberalism internationally – and with former Labour ministers as its early cheerleaders in this country on their way out that door and into the hard right side of politics by forming the Act Party – has demonstrated that “Me! Me!” economics has serious downsides.

2 current issues put the spotlight on “Me! Me!” versus a more sharing economy that can, if managed carefully, boost everybody’s standing. One is the debate about our prison population: How did it get to this point? If a high proportion of your population turns to crime, don’t you look for causes, then try to change those causes? Locking more people up for longer is an answer to the immediate issue, but it doesn’t solve the underlying issues, which amount to economic failure.

That’s very much the way New Zealand’s neoliberals in the Labour government of the 1980s approached the much-needed performance lift in government sectors, such as rail. Reorganisation was vital to success, but the other half of the equation was the people washed out of their jobs – and the loss of skills from that action, and from other industry changes.

The second issue is housing: Importing record numbers of people for a sustained period lifts the economy, but also creates problems and, while the total economy may grow, the per capita performance can easily decline. The focus was on total, because that suited the politicians in charge.

Importing over 70,000 people/year, net of exits, is fine if you provide for it. We didn’t. Not just in the latest spike, but in one a decade earlier. You need far more homes than were built, the shortage of supply naturally escalates prices, but incomes of the great unwashed haven’t grown to match.

Immigration is declining and, if Australia’s economy starts to rise, we can expect immigration to drop sharply. That changes a number of parameters – the demand & need for more homes, more infrastructure, more suburbs, more apartments are in the first batch. The kind of skills we’re training for may also change – after a belated recognition that more people would be required in construction, that demand is likely to fall away.

Education woes

The new government has found itself rescuing polytechnics, which don’t have enough money to conduct their primary task of teaching. Unitec’s annual accounts show how it was being pushed toward making losses, and it was reducing teaching staff. That, like the growth in criminal numbers, is an indictment on a country that prides itself on a history of opening education to all-comers.

Our new government was mocked for starting scores of inquiries in its first year, when it should have been praised for acknowledging concerns, inviting opinions and looking to do things better. You might still criticise, but at least you know a course is going to be followed.

Housing is a supreme example. Mockery for the suggestion that a government can build 100,000 houses in 10 years, but no mockery for the failure that got us to this sad, embarrassing point? What was plainly needed was a system to build homes at the bottom end of the price range – private sector builders were, unsurprisingly, building increasingly expensive homes for buyers who could afford them, and less & less at the basic end of the market.

Expensive, but not necessarily quality. I was given the example over the weekend of a $1 million-plus year-old home, up for an oil stain for the external timber to cover the initial water-based stain, which was always going to be inadequate. Over the last days of the last government I watched as its housing minister pushed for more construction, without offering any support – and looking for shortcuts. Auckland Council was concerned about the rules for special housing areas, the minister warned that the Government would take over the job of issuing consents. Doing things better, yes; that kind of shortcut, no.

Tuffley sees growth despite threats

And now back to Mr Tuffley at the ASB, who said in the summary of his quarterly report: “NZ growth should still benefit from a variety of drivers to keep growth around 3%. Healthy export earnings and resurgent house-building will offset softer business investment. But trade tensions and the risk of talking ourselves into a downturn are threats to that performance.

“The first thing to say about NZ’s growth outlook is that we [the bank’s economists] are positive about it. We expect growth to pick up from the moderate pace that set in from the middle of last year, and head back to a 3+% pace heading into 2019.  Over 2020 per capita growth should settle around the pace averaged over 2012-16, the purple patch of our post-crisis economic expansion.

“We see an economy that is being supported by solid fundamentals, with the drivers of growth being slightly more tilted to net exports. Global growth prospects remain very respectable – provided full-blown trade wars don’t occur. Our terms of trade will hold not too far off their recent record high, courtesy of strong export prices. This export performance is boosting incomes across many regions of NZ, evident in our regional scoreboard. For the past 3 years, provincial NZ has continuously taken the No 1 ranking in the scoreboard.”

House-building to surge?

In his summary, Mr Tuffley sees a surge in house-building this year despite falling immigration, and makes the commonly accepted point that, following Fletcher Building’s highrise miscalculations & Ebert Construction’s collapse, the commercial construction sector is confronted by big challenges

The commercial construction sector has been a weak performer for several years, boosted by remediation jobs and a boom in apartment development. Apart from regulatory controls, banks’ own controls on lending are likely to maintain construction at a subdued level.

However, Mr Tuffley sees a firmer economy than I do: “Domestically, a number of supports remain in place. Interest rates will remain low into 2020 on our updated official cashrate outlook. Population growth will continue at an above-average pace, even as the net migration inflow gradually slows. And a stronger focus on the quality of inbound migrants, such as refining lists of needed skills, should mean a greater economic contribution from the slight mix shift.

“Housing construction is set to surge again this year. The new government is delivering more stimulus through more welfare support & added infrastructure development. But there is likely to be some drag from commercial construction, particularly in the wake of the construction sector’s internal challenges. Weak business confidence risks holding back investment by businesses.

“There is a lot of debate at present about the direction of the economy, particularly given the depths to which business confidence has plummeted over the past 9 months. Our forecasts put us at the ‘cheerleading’ end of the spectrum rather than the ‘Chicken Little’ end. Where will reality end up?”

In the full report, Mr Tuffley adds: “We expect a strong labour market, rising wages, population growth & low interest rates to support consumer spending growth. However, there is some risk that a weak housing market in Auckland and a slowdown in visitor arrivals may weigh on retail activity in the near term. A key driver of our GDP growth forecasts is our expectation that stronger wages will boost consumer spending. A tight labour market, higher inflation benchmarks & minimum wage increases are all factors which should see wage inflation accelerate over the next few years.”

And some “if not, maybe”

And, back to his summary, he sees a number of factors & tensions to work through: “What does seem relatively certain is that NZ’s expansion has been going for a considerable period, and it does need some fresh drivers as recent ones mature. Businesses are starting to face – or at least anticipate – added cost pressures, but seem less certain of their ability to pass these on or sufficiently adapt. And businesses have genuine anxiety about potential shifts in government policy, such as industrial relations, which may not recede until clarity is provided.

“Aside from the risks from current trade tensions, business uncertainty is the biggest risk to a decent growth outlook. Downbeat perception is bumping up against what appears to be a decent reality. What will win out? At this point we anticipate reality will eventually bolster perceptions, rather than the other way around. But the risks are clear.”

Link:
ASB quarterly economic forecast, 27 August 2018

Attribution: Bank report & summary.

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Juwai questions NZ foreign buyer policy

Now that the New Zealand Government has produced statistics showing a low overall investment in New Zealand residential property by overseas investors, but investment that’s concentrated in specific areas, Chinese international real estate website Juwai.com has weighed into the argument.

Juwai, proclaiming its importance as the exclusive international real estate partner to Chinese online giant Tencent Holdings Ltd, which also operates the WeChat social media site, has used the figures out yesterday to portray a ban on foreign buying as a poor policy for New Zealand to adopt.

You can see this as either a veiled threat or an explanation of reality.

Juwai chief executive Carrie Law.

Juwai.com chief executive & director Carrie Law said: “Foreign buyers are important, useful, even vital without being a problem — I think that’s what the data shows.

“Foreign buying tends to be focused where there is lots of new development, making clear again that foreign investment leads to the creation of new dwellings. That’s vital in a market with a housing shortage.

“This data shows that the Government’s plan to ban foreign buying could make worse the housing shortage it is supposed to fix. By discouraging foreign buying, the Government could turn off the flow of money that helps fund new construction in New Zealand.

“Let’s take a moment to appreciate all the benefits of the New Zealand-China relationship. China accounts for 20% of Kiwi exports, delivers $800 million/year in international student spending and provides $1 billion/year in tourist spending, besides funding the construction of new housing.

“Foreign buyers account for about one 10th the number of transactions by local investors. If anyone is driving up prices, it’s your rich dad & uncle, not rich Chinese.”

About Chinese buyers

Ms Law said Juwai statistics for the whole of 2017 showed what Chinese buyers wanted.

“75% of our buyers in New Zealand tell us they are purchasing for their own use. A good school area is a top request for 8% of them. New Zealand is their most favourite country in the world, after the US, Australia, Thailand, Canada & the UK.

“The top cities for Chinese buyers are Auckland, Christchurch, Wellington, Queenstown & Hamilton.”

Juwai showcases 2.8 million listings from 90 countries.

Link: Juwai.com

Related story today: 3.3% of March quarter home buyers were foreigners – but 18.7% in central Auckland

Attribution: Juwai release.

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3.3% of March quarter home buyers were foreigners – but 18.7% in central Auckland

Statistics NZ said yesterday 3.3% of home transfers in the March quarter were to people who didn’t hold New Zealand citizenship or resident visas, up from 2.9% in the December quarter.

That low percentage has been the basis of an argument that foreign investors have been of no concern.

But, just as the general rise in house prices around the country has been led by Auckland – and specific areas of Auckland – that’s also where the impact of foreign buyers has been greatest.

Fully foreign buyers (no NZ citizenship or resident visa) numbered 1212 in the March quarter, up from 1158 the previous quarter. Partially foreign buyers (at least one NZ citizen or holder of an NZ resident visa) increased the total by 33,000 in the latest period, 36,800 in the December quarter.

Assuming that the part-Kiwis have come here to live, the focus can be on just that smaller number of fully non-Kiwis.

What the statistics don’t show

In Auckland, 7.3% of purchases in the March quarter were by buyers with no NZ affiliation. The double-digit wards were Waitemata (the central city), where 18.7% of purchases were by full foreigners, Upper Harbour 14.3% & Kaipatiki 10.3%.

There’s no differentiation in the statistics between purchases of apartments & houses in the Waitemata ward, which is material to the value of the statistics. Auckland’s (and New Zealand’s) apartment market has been led by sales through overseas campaigns, particularly through Singapore, Malaysia & Hong Kong. Without those overseas campaigns, most of the city’s big apartment developments would not have got out of the ground.

A second factor which is important but not taken into account is the reason for buying, and the impact of the group of buyers who appear to have a motive other than residence. I have argued over the last 3 years that foreign buyers at auction who have no apparent concern that the price they are paying is well above market will lead a more general rise in prices in that suburb. That’s been happening in some of the most expensive areas of Auckland, such as Remuera, but this year that segment of buyers has been subdued – far fewer in number and far more cautious. The shift has been away from ‘Buy anything, fast’ to ‘Buy an investment, well’.

Exercise being bedded in

Statistics NZ property statistics manager Melissa McKenzie said total transfers fell 9.4%, from 36,279 in the December quarter to 32,880, but the number of transfers to overseas people rose 4.3%.
The proportion of overseas sellers also increased in the March quarter, from 1.3% in each of the first 4 quarters of the new count, to 1.5% in the March quarter.

When Statistics NZ launched its new count in the December 2016 quarter, 90% of the 40,000 transactions were between people whose affiliation to New Zealand wasn’t recorded. The statistics were made more accurate in the March 2017 quarter, when vendors whose affiliation wasn’t know declined to 12.7%. In the March 2018 quarter, the affiliation unknowns were down to 39 buyers.

You can see from that that the statistical exercise is just being bedded in, but also that it’s an exercise that might not mean much (directly) in many areas. The targeting of specific Auckland areas for above-market purchases can flow on to other parts of the city & country. Foreign sales over a number of years have also meant more construction of apartments, now available at a range of price levels.

Ms McKenzie said nearly 10% of all sales in the March quarter were to corporate entities, but information on the ownership of those entities – by New Zealanders or foreigners – wasn’t available. Most trusts buying homes were included in the statistics for individuals rather than corporates, because every trustee must provide information about their citizenship or visa status.

She added another questionmark: “Consultation about amendments to the Overseas Investment Act may have been a factor in recent increases in the proportion of transfers to non-New Zealand citizens & residents. The proposed changes could make it more challenging for overseas buyers to purchase residential land in New Zealand.”

In the March 2018 quarter, the territorial authority with the highest proportion of home transfers to people who weren’t New Zealand citizens or resident-visa holders was Queenstown-Lakes district, with 9.7%. For the year to March, 7% of Queenstown-Lakes buyers were full foreigners and their share in Auckland was 5.7%.

Around Auckland for the year, 12.9% of Waitemata buyers were full foreigners, followed by Upper Harbour on 10.7%, Kaipatiki 7.6%, Devonport-Takapuna 7.4% & Howick 7%.

Real Estate Institute says ban could be counter-productive

Real Estate Institute chief executive Bindi Norwell questioned the merit of restricting sales to foreigners throughout the country and, given the low number of sales to foreigners in Waitemata, there too: “Looking more closely at the Auckland market, Stats NZ highlighted that 19% of sales in the Waitemata board [local board area] in the March quarter were to offshore buyers. This is roughly 85 sales, and even if these 85 properties were sold to local buyers or investors it is still unlikely to significantly impact the overall market.

“As we outlined in our submission to the select committee, if foreign buyers are banned from purchasing property in New Zealand, it could significantly impact development funding which would therefore impact supply and potentially see prices increasing – the exact opposite effect the ban is seeking to have.”

Data collection transferred

Statistics NZ has taken over the analysis & publication of property transfer statistics from Land Information NZ (LINZ). LINZ produced the quarterly Property transfers & tax residency reports from 2016, and has helped Statistics NZ replicate their methodology and enhance the data series.

Links: Amendments to the Overseas Investment Act
Transfer statistics methodology: Datainfo+

Earlier story:
28 May 2018: First statistics on property transfers out in 10 days

Attribution: Statistics NZ release & tables, own observations, Real Estate Institute.

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First statistics on property transfers out in 10 days

Statistics NZ will publish statistics on property transfers by New Zealanders & overseas people, starting on Thursday 7 June.

Property statistics manager Melissa McKenzie said on Friday: “The statistics will include information on the citizenship or visa status of people transferring property, including homes, in New Zealand. They will also include information on the tax residency of people & companies involved in property transfers.

“The data in this release is mainly derived from land transfer tax statements (LTTS). The Land Transfer Office collects tax-related data when people buy, sell or transfer property, to ensure people comply with their tax obligations. They also gather some information for housing policy purposes.

“Stats NZ is taking over the analysis & publication of property transfer statistics from Land Information NZ (LINZ). LINZ has produced the quarterly property transfers & tax residency reports since 2016 using LTTS data, and has helped Stats NZ replicate their methodology and enhance the data series.

“As statistical releases are part of Stats NZ’s core business, we’ve worked with LINZ to take over their reporting on property transfers. Some new features of the Stats NZ releases will be the time series of the data, and details of home transfers by their location in New Zealand.”

Ms McKenzie said the first release would separate out property transfers to holders of resident visas. Previously these buyers & sellers were in the same category as New Zealand citizens” “This additional detail will help provide a fuller picture of who is buying & selling property in New Zealand.”

Attribution: Statistics NZ release.

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Auckland readymix production slips

Statistics NZ’s quarterly calculation of ready-mixed concrete production shows a small slowdown nationally over the last 12 months and a bigger slowdown in Auckland.

The concrete statistics are an indicator of construction activity.

There’s been a switch from concrete to steel framing for some major construction, including the Commercial Bay downtown project being undertaken by Precinct Properties NZ Ltd, but readymix’s main role is in domestic & smaller commercial construction.

Statistics NZ produces metropolitan area & regional statistics for concrete use in Auckland, and the metropolitan area shows a bigger decline.

For the 4 quarters to March 2018 compared to the previous 12 months, readymix production nationally fell 0.32% to 4070m³ (4084m³). For the Auckland region, production was down 4.8% to 1428m³ (1488m³) and, for the metropolitan area, it was down 6.3% to 990m³ (1057m³).

Comparing just the 2 March quarters, the falls were 4.99% nationally to 913m³ (961m³), 8.35% for the region to 318m³ (347m³), and 7.4% for the metropolitan area to 225m³ (243m³).

Auckland’s share of national readymix production also fell for the year, to 35.1% (36.4%) for the region and to 24.3% (25.9%) for the metropolitan area.

National production rose in the June & September quarters last year, but Auckland regional & metropolitan production fell in all 4 quarters compared to a year earlier.

Attribution: Statistics NZ.

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Dickens alleges business confidence surveys contain major political bias

Independent economist Rodney Dickens said in his first Ravings with Rodney column for the year the business confidence surveys which lead political & economic direction “have major political bias”, and backed that up with charts & statistics.

Mr Dickens, who runs his own company, Strategic Risk Analysis Ltd, wrote: “The ANZ business survey has gone AWOL again. Unfortunately, the bank economists – and therefore the media – haven’t focused enough on the massive political bias that currently overwhelms the results of the survey and make it a poor input into business & investment decisions.

“The NZIER business survey has been corrupted less by political gamesmanship, but some components have become poor leading indicators, while even the most useful component is under a cloud.”

In his Raving column, Mr Dickens put the 2 main components of the ANZ & NZIER surveys “in context which is critical for assessing whether much, if any, weight should be put on them in making business & investment decisions.

“When what were once useful leading indicators can’t be relied on, it increases the importance of having access to quality analysis of economic and housing prospects as input into business and investment decisions. Our driver-based approach to forecasting, that is supported by educated interpretation of the leading indicators rather than blind faith in indicators that have gone AWOL, should be a must-have for any businesses & investors wanting to make informed & profitable decisions.”

What Dickens found

“Based on the ANZ business confidence survey, the economy is heading for a recession (ie, negative gdp growth), with significantly more firms negative than positive (left chart). Based on the ANZ own activity survey, near-term prospects for annual gdp growth aren’t so bad, but growth should slow to below 2% over the first half of this year (right chart).

“When these surveys tumbled in November after the election outcome was finalised, the results were reported as if there was a significant threat to economic growth. For example:

NZ Herald, 30 November 2017: Business confidence tumbles to 8-year low in November
Stuff, 30 November 2017: Slump in business confidence poses ‘material risk’ to economy

Mr Dickens didn’t blame the journalists for reporting the survey results verbatim: “They lack the resource & maybe knowhow to back-test the reliability of the surveys. Consequently, they rely on the bank economists to provide the appropriate interpretation, which is a mistake.

“The headlines should have read: “Businesses again hijack survey to make political protest” & “Survey greatly overstates economic risks from the change in government”.

Mr Dickens said these surveys were useful indicators of near-term economic growth prospects before 2002.

He said the NZIER survey “hasn’t been corrupted as much by political gamesmanship: Thankfully the commentary by the NZIER principal economist regarding the falls in many components of the NZIER quarterly business opinion survey was more balanced. This has in turn largely been reflected in the media commentary on the results of the December quarter survey.”

Note: Red & blue lines across the foot of each graph denote periods of government: Labour (red), National (blue).

Links:
NZIER, 16 January 2018: NZIER’s quarterly survey of business opinion shows businesses more pessimistic after the election
Stuff, 16 January 2018: Business confidence drops, with fewer expecting to hire or invest
Interest.co.nz, 16 January 2018: NZIER business opinion survey shows the usual fall in confidence after a Labour-led government takes office, effect of election on actual business activity muted

Mr Dickens took issue with what he said was “still a lack of supporting analysis to put the NZIER December quarter results in context. And in my assessment there hasn’t been enough focus on political gamesmanship; instead, like the commentary accompanying the ANZ November & December surveys, the initial focus was on ‘uncertainty over new government policies’.”

He said the NZIER business confidence survey “has, like the ANZ business confidence survey, become much less useful as a leading indicator of economic growth since 2002. As the NZIER principal economist goes on to point out, it has generally had a negative bias while Labour governed and a positive bias while National governed, although this has only been the case after 2002.”

Link:
Rodney’s Ravings (entry by free subscription)

Attribution: Rodney’s Ravings.

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Dickens to provide more regional economic research

Economist Rodney Dickens’ Strategic Risk Analysis Ltd will produce quarterly Regional barometer reports from April.

Mr Dickens said yesterday the Regional Barometer reports would:

  • provide advance warnings of upturns & downturns in the number of consents for new dwellings, the number of existing dwelling sales and existing house prices for each region covered, and assess the likely magnitudes of upturns & downturns
  • assess whether the region will significantly outperform or underperform the national experience in the 3 areas listed above in the year ahead
  • assess regional consumer spending prospects and provide a range of background information particularly relevant to the performance of residential building, and
  • assess which city or cities & major districts within the region are likely to significantly outperform or underperform the regional experience in the year ahead.

Mr Dickens founded Strategic Risk Analysis in 2006 after 5 years at ASB Bank, which included being group strategist & head of research. He’s been a member of the Reserve Bank’s monetary policy committee and researched international interest rate behaviour at the Bank of England in London.  He’s also been chief economist at one New Zealand commercial bank and New Zealand head of research at 2 international investment banks.

Link: Strategic Risk Analysis

Attribution: Company release.

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NZIER says data points to recovery slowdown

Published 31 August 2010

NZ Institute of Economic Research principal economist Shamubeel Eaqub said today local & global data made it plain the recovery was slowing.

 

“There is sufficient momentum &stimulus in the economy to avoid a repeat recession, but the economy will be soft in the next 6 months. Households remain cautious with spending, net migration will slow further and non-residential construction work is now running dry.”

 

The details are in NZIER’s September quarterly predictions, which contain forecasts covering the next 5 years.

 

“We remain less optimistic than other forecasters. Businesses should review their risk exposures, investment & hiring plans accordingly. We expect economic growth of 2.2% in 2010, but it will slow to 1.2% in 2011 before rebounding to 2.9% in 2012. This reflects a weak patch in late 2010 & early 2011. Our view reflects a cautious attitude from households & businesses, slowing net migration and an impending slump in non-residential construction. Other forecasters on average expect growth of 2.6% in 2010, 3.2% in 2011 & 2.7% in 2012.

 

“For retailers, it will feel like a recession for some time. Retailers should plan for a disappointing pre-gst-hike spend-up & Christmas shopping. Households remain cautious and are making do with less than before the recession. A slow recovery in jobs & wage, and debt repayment will dampen spending for some time. Impending food price increases and other one-off costs will offset the personal tax cuts for the lower half of income earners.

 

“The non-residential construction sector is at the precipice of a collapse. Work usually lags consents by a year – a year ago the level of consented floor area fell by a third. This alone may put around 20,000 construction sector jobs at risk.

 

“Businesses are not yet ready to pay higher wages or invest in new capital & employees. Profit margins are skinny and business borrowing continues to contract – indicating that a very low official cashrate has not yet encouraged investment in the economy.

 

“The Reserve Bank will pause in raising interest rates, given near-term growth risks and distant inflationary pressures. Interest rates for households & businesses are much higher than the official cashrate or wholesale interest rates. This is strangling the recovery and there is little growth in borrowing. We expect the Reserve Bank to keep the official cashrate at 3% until March 2011, and then gradually increase to 5.5% by early 2012. Rates may rise earlier in 2011 if the recovery strengthens.”

 

Want to comment? Go to the forum.

 

Attribution: NZIER release, story written by Bob Dey for the Bob Dey Property Report.

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Indicators report sets scene, doesn’t list easy comparisons

Published 6 January 2008

The Government’s Economic indicators report, released on 19 December, “shows New Zealanders have a good quality of life and our economy is improving faster than the OECD average,” Economic Development Minister Pete Hodgson said.

 

The report is a joint publication from the Ministry of Economic Development, Treasury & Statistics NZ. It updates & expands the 2 previous reports published in 2003 & 2005.

 

It’s not a document that lists easily compared pluses & minuses, but collates a large amount of information on New Zealand’s economic performance – high-level outcomes like economic growth and also the underlying factors like innovation & investment that drive growth.

 

Its official authors, the heads of the 3 Government entities, said: “The main purpose of the reports is to inform future economic policy, promote informed debate and provide a basis to engage with people over the direction of the New Zealand economy. The indicators also provide a basis to measure New Zealand’s performance over time & against other countries.”

 

Mr Hodgson said: "Under the Labour-led Government, our economy has been stronger for longer than at any point since the end of the Second World War, but we are ambitious to keep improving in areas such as labour productivity, national & household savings rates, innovation and research & development.

 

"The report is encouraging in that it shows income levels (gdp/head) have begun to slowly increase relative to the OECD average, after decades of decline. Much of this recent growth is due to near-full employment rather than productivity, which is still not sufficiently strong.

 

"On most of the things that are important for growth, the report says we are either keeping up with the OECD or improving relative to them. For example, it shows a relatively good level of entrepreneurial behaviour, improving skill levels, high rates of labour utilisation and a recent improvement in business investment."

 

The 2007 report contains new indicators covering wellbeing & prosperity, regulation & tax policy and infrastructure, and 2 new chapters – one looking at Auckland as an international city and another comparing New Zealand’s performance to that of Australia & its states.

 

Mr Hodgson said: "Our growth performance has been around the middle of the Australian states over the last decade or so and, while more New Zealanders are moving to Australia, the net outflow is similar to that experienced by some states to other parts of Australia."

 

He said the Government was addressing many of the issues the report raises through a number of initiatives: “As the report points out, these initiatives have not yet had time to impact on the picture the report presents. These include Kiwisaver, the R & D tax credit and the latest range of initiatives to advance the economic transformation agenda."

 

Websites: Economic development indicators report 2007

Content topic summary

 

Want to comment? Click on The new BD Central Forum or email [email protected].

 

Attribution: Government release, report, story written by Bob Dey for this website.

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