Brave new world

Written By: - Date published: 6:45 am, June 22nd, 2012 - 24 comments
Categories: Economy - Tags:

When the government is hooting and hollering over 1.7% annual growth, it’s time to admit we’ve entered a new paradigm. In the past, you would have expected 4-5% growth coming out of a recession. Now, anything above the rate of population growth is treated as a miracle.

Growth as we used to know it isn’t coming back. If the global economy ever does show signs of life, we’ll just be slammed by unaffordable oil again.

What does that mean for economic policy?

24 comments on “Brave new world ”

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  1. r0b 1
    22 June 2012 at 7:17 am

    Brian Fallow explains the current growth surge here:

    Exceptionally good growing conditions on the land saw economic growth shoot up in the first three months of the year.

    Gross domestic product rose 1.1 per cent in the March quarter, well ahead of economists’ expectations of 0.5 per cent and the strongest quarterly growth for five years. It pushed annual average growth to 1.7 per cent up from 1.3 per cent in calendar 2011. The dollar and wholesale interest rates rose in response.

    But the details of the data reveal a less verdant picture.

    Much of the growth was concentrated in agriculture and its downstream processing, reflecting a bumper growing season which has come and gone. Agricultural output jumped 2.3 per cent in the quarter to its highest level since December 2006. The food processing sector’s output jumped 3.2 per cent, driving a 1.9 per cent increase in manufacturing overall.

    But volumes are one thing, prices another. In the same quarter export prices for dairy products and meat fell 4.8 and 5.4 per cent respectively in New Zealand dollar terms, according to ANZ’s commodity price index.

    • Enough is Enough 1.1
      22 June 2012 at 12:27 pm

      Exactly.

      This Government is fraudulent at best if they try to take any credit whatsoever for this growth figure. They have absolutley nothing do with it. Not a thing. Their actions have contracted the economy. It is the policies of the last Labour government, some wet weather and the hard graft of kiwi workers. Not that idiot John Key

  2. shorts 2
    22 June 2012 at 7:17 am

    when is growth not growth….

    “Taking away the stocks surge the economy actually shrank 0.5% in the quarter and grew only 0.3% in the year to March.”

    http://tonyalexander.co.nz/regular-publications/europe-worrying/#more-732

  3. Robert Atack 3
    22 June 2012 at 7:21 am

    Like I keep saying this dose not look good for Labor/green Kiwi Savers.
    Calling all honest politicians …. tell the truth

    • muzza 3.1
      22 June 2012 at 7:31 am

      It seems that once an individual has committed to Kiwi Save that the IRD state, you are not able to exit the scheme..

      Anyone have any details around this?

      • Te Reo Putake 3.1.1
        22 June 2012 at 7:51 am

        Not so, muzza. There are options to get out. The first one, obviously, is to get old. Then you are entitled to withdraw your savings. You can also do so if you are not going to earn in NZ any more due to significant injury or due to emigration. Savers can also take out money to use as a deposit on a house, which is another form of saving for your retirement, of course.
         
        It’s money for jam, particularly with the Gov’t top up. You’d be mad not to be in it.

        • You_Fool 3.1.1.1
          22 June 2012 at 8:41 am

          Though, as far as I am aware, that if you withdraw from the program early you only get your contributions back… Not the government nor your employers contribution….

          • Te Reo Putake 3.1.1.1.1
            22 June 2012 at 8:47 am

            Nope, the facts are here. I’d forgotten that you can also withdraw contributions if you are suffering significant financial hardship, as well as the other circ’s I already mentioned.

      • Lanthanide 3.1.2
        22 June 2012 at 11:52 am

        You can also go on a contributions holiday and not pay anything more into the scheme if you want.

  4. Tom Gould 4
    22 June 2012 at 7:33 am

    Can any economist out there tell me if the massive surge in the Auckland property market over the last 3 or 4 months show up in these figures? I seem to recall the Tories bashing Labour for ‘fake growth’ off the back of a property boom? Or was that just spin?

  5. burt 5
    22 June 2012 at 8:06 am

    When the government is hooting and hollering over 1.7% annual growth, it’s time to admit we’ve entered a new paradigm.

    For sure, we don’t have Labour and it’s send the economy into recession policies. Waa hoo – isn’t it great !

    • KJT 5.1
      22 June 2012 at 8:15 am

      Word from another planet again. Just look at growth rates under RW parties.

      The first ACT Government (1984) and National have even managed to have recessions when the rest of the world does not. Of course all those MT shop fronts during the 90’s and now were just in my imagination?

    • You_Fool 5.2
      22 June 2012 at 8:47 am

      Is it just me, or are you trying to blame the Global Financial Crisis on the NZ 5th Labour Government? That is an interesting position to take, and I guess all those US and European bankers can breathe a sigh of relief that their actions had no impact at all and they can start to sleep again….

    • Deano 5.3
      22 June 2012 at 9:10 am

      burt. you’ll be excited to learn that revisions to the figures now show we didn’t enter recession until June 2008.

      So your ‘Labour drove us into recession ahead of the rest of the world’ line no longer works – not that it did before –

      half the OECD went into recession in March 2008 and the other half in Juen 2008.

      • McFlock 5.3.1
        22 June 2012 at 1:10 pm

        You know the logic – if it is bad and happens under Labour, it’s a Labour’s fault. If it’s bad and happens under National, it’s Labour’s fault (because they set the country up for it) and would have been much worse if not for National’s noble efforts. If it’s good and happens under Labour, it would have been so much better under National, and National should get the credit anyway (because they set the country up for it). It it’s good and under National, it never would have happened under Labour.
               
        With that logic, the true tory does not need to be encumbered with painful things like “facts” or “reality”.

         

    • mike e 5.4
      22 June 2012 at 8:13 pm

      burt 3 months growth in 4 years and its all over already .
      labour 8 out of 9 years growth at above 3 %.
      burt stick to fairy stories and sesame st.

  6. ianmac 6
    22 June 2012 at 10:02 am

    Funny how the response to 1.7 growth is for Key/English to say, “Look how well our policies are working.”
    When growth is bad Key/English say, “Not our fault. Global fault outside our control.”

  7. Bill 7
    22 June 2012 at 11:50 am

    Not sure I understand the question posed in the post…or more precisely, why that particular question was posed.

    If growth rates are dropping then the only impact on economic policy will be in terms of finding a way to boost growth rates again. And that’s a really stupid thing to do for a whole host of reasons.

    Meanwhile, if ‘the market’ cannot produce growth, and since the market is predicated on ideas of growth, the obvious question that needs to be asked is one that is far more fundamental than anything to do with market based economic policy.

    • Deano 7.1
      22 June 2012 at 12:37 pm

      right now, economic policy has growth at its centre.

      if we give up on growth because it ain’t happening, then what should economic policy be orientated towards?

      • Bill 7.1.1
        22 June 2012 at 1:27 pm

        Why not economic policy with democratic participation at it’s center? Y’know… people having meaningful input into decisions around resource use and distribution as opposed to the present situation where a few powerful actors (measured in terms of the money they have accrued) more or less dictate economic activity.

        It seems to me that all business is simply a means to making money. And when viewed from a perspective of human need or environmental impact, it’s blatently obvious that very poor economic decisions flow from that undemocratic market context and its demand for growth.

      • Draco T Bastard 7.1.2
        22 June 2012 at 5:07 pm

        Economic policy should always be oriented towards supplying what the society needs. It neither needs profit nor growth (although some development is always good).

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