How is Robbo going to spin this good news?

Labour likes to talk down New Zealand and its economy. They are trying, and failing, to convince voters that they have better solutions.

I doubt even Robbo could spin this news negatively.

This Thursday GDP figures are expected to show the New Zealand economy grew by at least 3.5 per cent in the year to June 30.

ASB’s economists are picking it to be as high as 3.7 per cent.

“We expect GDP lifted a whopping 1.2 per cent over the June quarter, led by construction, manufacturing and retail activity,” ASB senior economist Jane Turner writes in her preview.

Hang on just a minute, wasn’t there supposed to be a crisis in manufacturing?

That will be a stunning result for an agricultural economy that has just been through one of the most dramatic dairy price slumps in living memory.

It’s hard not to draw the conclusion that the rock star economy is on the comeback trail – at least in the terms that the catch-phrase was originally coined by HSBC economist Paul Bloxham.

That is to say, relatively speaking.

New Zealand currently has one of the highest growth economies compared to peers in the Western developed world.

The country hasn’t had a recession in eight years now.

And who put NZ in recession? Oh, that’s right, Labour did.

Australia’s economy has just rebounded to 3.3 per cent annual growth.

The bounce in dairy prices of the past few weeks – moving things out of financial disaster territory at least for most farmers – will only add to the confidence to New Zealand’s outlook.

We saw in on the currency market last week as the kiwi surged to US74.5c – a 16 month high – and also lifted above A97c.

“The surge in Q2 growth will be led by the construction sector, manufacturing and retail activity. Unusually strong exports will also contribute to a temporary boost to Q2 growth, led by large lifts in meat, dairy, kiwifruit and oil exports,” ASB’s Turner notes.

There’s no doubt the strong economic growth is also being underpinned by record net migration gains.

Voters never turf out a government when the economy is performing well.


-NZ Herald

  • Second time around

    It’s easy to talk down, because a lot of the activity is generated on shore by tourists and by immigrant’s savings. Robbo will already have a question for Bill English about the declining export earnings per head of population.

    • Aucky

      Tourism spending and immigrants’ savings are effectively export earnings.

    • RoboRob

      Oh yeah. I forgot about the ‘per head of population’ gotcha. Surprise surprise in a rapidly growing population. I assume that some negative stats are actually improving because of this too (like % crime commited by Maori)

  • RoboRob

    Easy, Robbo will say…

    ‘This is driven by immigration and if we strip that out growth is almost 0. National are using immigation to prop up the economy at the expense of the poor and youth who face increaseingly unaffordable house prices.’

    There you go, I too could be a politition :)

    Note that when the CHCH rebuild was full steam and NZ was one of the only economies not in serious trouble the line was….

    ‘The Insurance payout for the rebuild are the only thing keeping the economy going, if we strip that out NZ is in recession’.

    Soon the line will be ‘Dairy is the only think keeping the economy going, if we strip that out…’.

    Yes its true, if you strip out things that grow your economy than surprisingly your economy doesn’t look so good. Remarkable.

    • Aucky

      I don’t think dairying can enter into Robbo’s arguments as Labour’s coalition partner wants to put dairy farmers out of business.

      • Second time around

        Also, dairying does not provide meaningful jobs that would stimulate Andy’s mob to get out of bed and work in the morning.

        • Brian Dingwall

          But dairying does provide jobs in NZ…..the Filipinos come here to milk cows….Spark and Vodaphone on the other hand take their jobs to Manila….cos Andy’s mob dont want ’em, or can’t do ’em, in both cases.

          • Keanne Lawrence

            Not only Manila benefits but throughout the Philippines. Even here in Negro Oriental the firms providing these services are constantly hiring. The amusing thing for me is that even though English is taught from Elementary they struggle with a Kiwi version. Potato or Po tato?

          • Brian Dingwall

            Really enjoyed my regular visits to the Philippines throughout the 90’s….first went in after the EDSA revolution, was on the NZ-Philippines Business Council for about 7 years….hence treated pretty royally…..last visit was in 2004 and even in Makati didn’t feel safe. Sad. Best to you, in many ways I envy you.

      • Keeping Stock

        And dairy is starting to rebound from the cycle of low prices, so that will give the economy added impetus going forward.

        • Ruahine

          Damn. I will not be able to buy a dairy farm now and import immigrants to milk the cows because I do not like to get up too early to milk smelly cows.

      • RoboRob

        Yes thats part of the Greens plan to ‘Grow’ our economy.

        • contractor

          They should stick to growing “NZ Green” the name for home grown wacky backy. They sure seem like they smoke the stuff.

    • Observer

      Yes, Christina Chueng said that per-capita the GDP growth was .8%. Still better than what it could be given dairy prices, but more modest nonetheless.

      • Ruahine

        How can we possibly trust someone with such a chinky name. I bet she just wants the property market to suddenly tank so that she can buy a whole lot more houses.

    • Asian_driver

      Welfare is the only thing thats keepingthe economy going, if we strip that out growth figures could easily double

  • Hard1

    If Robbo reads the news, he will look forward to one day emulating the looming Australian housing crash predicted to happen in 6 weeks. That’s right, they are saying that it’s a load of rubbish over there, but just one change is predicted to crash the housing market bubble. The Bank’s crackdown on foreign investor lending.

  • Superman

    All good news but I’m a bit worried about your last sentence. You can never overestimate the bad taste of the average voter.

  • Keanne Lawrence

    Surely by now most know Robbo only has the latest flavour of economics as well as the older element of Money, Banking and Finance. He is the best entertainment in the house at question time sniggering and smiling like the preverbal Cheshire Cat when he bounces to his feet. Then rapidly tries to get both his feet in his gob made easier by such broad smile. He just does not get it at all for which we are constantly get illustrations of.
    He will again hammer the per-capita result that so many other “experts” all seem to produce varying numbers for with which ever algorithm is fashionable or found. They all fall into the same trap by polarising on the short term.
    IMHO there a lot of very clever, astute people in NZ who are constantly learning by not even bothering to say much at all but rather listening and looking. While there will inevitably be variances in their assessment they will be minimal as they will look to trends, patterns and if they err on the side of caution dictating a conservative prediction.
    If the setback in dairy returns has a positive side it surely derives from the Kiwi can attitude. The shortfall has been well and truly compensated for with rapid growth in so many other sectors.
    They can crunch the numbers all they like but at the end of the day it boils down to one single factor that getting the basics right and the rest will fall into place. The stability in the growing economy is proof enough of that even to the extent of retail spending making a significant contribution.
    It is also very significant that interest rates around the world are showing little or no upward movement as the length of languishing at such low levels grows by the day.
    Retail buyers have never had it so good as they too are finally able to risk a little to look to their wants list having done the hard yards. Look for red herrings coming your way soon.

    • Bruno 32

      The dairy industry has sharpened it’s pencil too ,don’t forget.When payout gets above $5.00 / Kg of Milk solids most will be back into profit. 0