National really, really needs New Zealand to be in a recession

Written By: - Date published: 7:59 am, September 24th, 2023 - 22 comments
Categories: economy, making shit up, national, same old national, spin, you couldn't make this shit up - Tags:

It was a very interesting week this week.

Statistics NZ shot a whole lot of National’s advertising down by revising GDP growth figures so that the previous quarter was stable, thereby meaning New Zealand did not actually go into recession.  There was actually no recession in New Zealand.  And a stonking 0.9% growth rate for the latest quarter suggested that things were on the improve.

National pirouetted by claiming that New Zealand WILL be in recession in the near future and that the Reserve Bank has predicted this.

It is true that in August the Reserve Bank in its Monetary Policy Statement predicted two quarters of negative growth, the technical definition of a recession.  Here is the table with its predictions located at page 55 in the appendices.

Please note that the prediction for the June quarter was very pessimistic and was just more than half of what the rate actually was.

But the report itself at page 23 in the main text said this:

Economic growth in the first quarter of 2023 was weaker than expected, and periods of further economic contraction over 2023 remain possible. We continue to expect low or no growth in GDP overall until early 2024, similar to what was expected in the May Statement. However, significant quarter-to quarter volatility is likely.

Saying that the Reserve Bank predicted a recession is a real stretch.

But you have to admire National’s spin doctors.  They will locate some stray text an then spin it within an inch of its life and claim that their simplification of a summary is right over and over and over again.

And let me don my tinfoil hat and note that the Reserve Bank does not fill me with confidence that it is completely independent.

Its chair is this guy who was caught recently giving policy presents to National.  His desire for a new medical school is understandable for his CV but I wonder if it is a good thing for the country to let him oversee the production of material that seems to me to be more conservative than it needs to be.

Left wing equivalents like Rob Campbell get hung out to dry for showing signs of partisanship.  National attacked him mercilessly after he dared say what he thought.

And unfortunately for National Standard and Poors has this month come out with a rather rosy review of the economy.  From Radio New Zealand:

Global ratings agency Standard & Poor’s (S&P) has affirmed New Zealand’s AAA local currency and AA+ foreign currency credit rating, saying the outlook for the country is stable.

S&P said it expected the country’s fiscal deficit to narrow over the next three years as Covid-19-related spending measures came to an end.

“Net general government debt will stabilise at a level that is modest compared with that of most highly rated sovereign peers,” S&P said.

“New Zealand has tipped into recession, and higher interest rates will dampen growth. However, a slowing economy should constrain demand for imports, helping to alleviate the current account deficit.”

The ratings agency said the stable outlook on its long-term credit ratings on New Zealand reflected its high assessment of various factors relating to the country.

“The country’s excellent institutions, wealthy economy and moderate public indebtedness will balance credit risks associated with a large current account deficit, high levels of external and private-sector debt, and volatile property prices over the next two years.”

I admire National’s message discipline. Its incessantly negative presentation of the state of the economy has talked many people into a very negative state of mind.  Its presentation is spinning reality to the extreme and frankly is damaging to the country’s interests.  We do need to have a debate about the economy but one that is reality based.

Politics should be better than this.  Let there be a civilised discussion about what state the country is in and what needs to happen to make it better.  Currently this is not happening.

22 comments on “National really, really needs New Zealand to be in a recession ”

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  1. Dennis Frank 1
    24 September 2023 at 8:53 am

    Immaterial really. No voters are likely to care whether the economy is slightly above or slightly below the line. Any reader who disagrees with this probably believes maths influences branding 🙄.

    I agree that a civilised discussion would be helpful, but democracy does not train politicians to provide such, and society doesn't use media that provides much.

    We can bask in the warm glow of degrowth, which looms just below the event horizon, and may rise to cast its enlightment onto the people any year soon.

  2. barry 2
    24 September 2023 at 9:10 am

    It is easy to predict a recession if National win. It will be guaranteed if they cut public services as much as they have promised. Tax cuts will not be spent enough to compensate.

  3. Ad 3
    24 September 2023 at 9:18 am

    Sober and balanced assessment from S&P there.

    3.4% unemployed, tourism still 20% off peak, 20,000 workers needed on civil infrastructure …

    Let's get to work

  4. AB 4
    24 September 2023 at 9:33 am

    I admire National’s message discipline

    Business and the wealthy want their country back. They'll do whatever it takes to get it.

    • Barfly 4.1
      24 September 2023 at 2:21 pm

      "Spreading rumors and lies and stories they made up"

      From the lyrics of "Candidate" by David Bowie

  5. Nic the NZer 5
    24 September 2023 at 1:31 pm

    If we want to have an actual constructive conversation about the economy it might start out by highlighting the Reserve Bank has only narrowly missed generating a recession with their interest rate hikes. Maybe the Labour government should explain why a recession is necessary, because ultimately this is the government policy. The government of the day can't have it both ways and claim that its actually just Reserve Bank policy because ultimately the government sets the policy targets and frame work the Reserve Bank operates within (pretty much as any other department works).

    Now we know National is basically broadcasting that a recession should be generated (and would pursue that result harder), but since Labour seem to be practically comfortable with that being the effective outcome they don't appear to be proposing an alternative to follow the election anyway.

    • pat 5.1
      24 September 2023 at 2:01 pm

      Does the NZ Government create the demand for (the little) we produce?

      We attribute far more control to both the Gov and its (very loosely attached) arm the RBNZ than exists in reality

      • Nic the NZer 5.1.1
        24 September 2023 at 3:51 pm

        "Does the NZ Government create the demand for (the little) we produce?"

        The government purchases some of what we produce in NZ, but you know that and I have no idea the purpose of the question. Maybe your making some hint that a recession (or the kind of austerity policy ACT are proposing) will likely lead to a larger budget deficit rather than a smaller one.

        The problem here is the rhetoric doesn't match the policy. If Grant Robertson thinks we need more unemployment (e.g a recession) right now he should be asked to justify that call, or on the other hand he should have to explain if the RBNZ wants more unemployment what he is doing to change their mind.

        • pat 5.1.1.1
          24 September 2023 at 4:52 pm

          It is obvious the (independent) RBNZ wants an increase in unemployment and the expected subsequent reduced demand…whether the blunt tool of the OCR will acheive that is yet to be determined….Robertson ( and shortly Willis) can explain or deflect that fact as much or as little as (s)he likes, it will not change the action.

          The ability of either to create demand for what NZ produces is marginal given neither control in any significant manner the need, desire or ability offshore markets to purchase what we have to offer.

          • Nic the NZer 5.1.1.1.1
            24 September 2023 at 5:10 pm

            You're saying the finance minister (more broadly parliament) can't change the monetary policy behavior of the RBNZ? This is untrue, and were it true in a democracy that institution should be replaced by a democratically accountable one.

            • pat 5.1.1.1.1.1
              24 September 2023 at 5:12 pm

              Parliament could but for their own reasons have indicated no desire to date to do so….the same can be said of using migration to underpin nominal GDP growth.

  6. sad 6
    24 September 2023 at 2:23 pm

    Got to give it to NW she is good at parroting same twisted info along with lux on.

    how about tabling super trends for next couple of years one with labour model and the other with Nats. She didnt want to elaborate wonder why

    Heres a thought instead of giving already wealthy landlords tax deductability give it to true first home buyers from the squeased middle and below

    She and luxon talk so much about the incredibly hardworking deserve a tax break of a few dollars but in the same breath gives billions to landlords for no work at all

    • Barfly 6.1
      24 September 2023 at 4:19 pm

      Jeez anybody would think they own a lot of houses…………ooh that's right they do

    • mikesh 6.2
      24 September 2023 at 9:34 pm

      She and luxon talk so much about the incredibly hardworking deserve a tax break of a few dollars but in the same breath gives billions to landlords for no work at all

      I don't see any financial difference between investing in a company and receiving a dividend, and investing in a rental property and receiving rent. But a company dividend usually has an imputation credit attached, so it would be nice if rent could also come with one attached. The problem is that, while all companies are taxed at a fixed rate of 28%, tenants' tax rates are likely to be many and varied. Perhaps IRD could compromise and allow a standard amount of, say, 17.5% to be deducted from all residential rental income, in lieu of an imputation credit. After all rent is a simple transfer payment , on which the tenant will already have paid tax.

  7. Mike the Lefty 7
    24 September 2023 at 4:23 pm

    If it were National in government, they would be claiming that these same figures were showing strong growth. At least Labour aren't THAT dishonest.

    Perhaps it all boils down to that the NZ economy isn't the basketcase that National would like it to be right now.

    National are annoyed at how resilient we are.

    Superior economic managers?

    Hmph! Only in their minds.

  8. tsmithfield 8
    24 September 2023 at 7:20 pm

    I don't think most people give a monkeys about whether we technically are in a recession the most. The most likely care more a​​​​​​bout whether they feel like they are in a recession.

    Petrol now over $3 per litre in many areas, and other cost spiralling costs on basic essentials probably contributes to that feeling I expect.

    • Barfly 8.1
      24 September 2023 at 8:19 pm

      Some companies are doing their best to boost those spiralling prices. I used to be happy to have a Countdown store 200 metres from where I live but now after checking prices I am cursing that it's not a PaK'N'Save. The last couple of months I have compared Grapes

      Out of season Grapes Countdown $25.98/kg Pak'N'Save $12.99/kg

      In season Grapes Countdown $12,99/kg Pak'N'Save $ 8.99/kg

      Sure tons of other products and it can't be all one way traffic…. but with the pricing activity I have observed at Countdown I get the feeling we are being stuffed over.

      • Patricia Bremner 8.1.1
        25 September 2023 at 1:21 am

        Hi Barfly, yes, I have that problem. The only store doing deliveries is Countdown where I live. So am trapped by their extortion. \

        I have managed to get ahead with some basics like soap powder and other "keepers" and buy them on special only, which is the usual price. Convenience Costs.angry

        Our PknSave doesn't do Click and Collect either, and New Worlds site to order is bollocks.

      • PsyclingLeft.Always 8.1.2
        25 September 2023 at 8:19 am

        Well, they do have to pay for their "makeover"……

        Countdown to become Woolworths in $400 million rebrand

        https://www.rnz.co.nz/news/business/493925/countdown-to-become-woolworths-in-400-million-rebrand

        In my area…yet another new Countdown "supermarket"….and unsurprisingly…the so called "competition" has led to…none.

        Actually, they are so similar….you might think it was a duopoly : (

        All their so-fake feelgood advertising doesnt alter….they are just a rort.

    • Drowsy M. Kram 8.2
      24 September 2023 at 10:00 pm

      If it feels like a recession, and Kiwis are having to cut their cloth accordingly (most more than some), then how the Nats plan to fund their promised tax cuts, and who benefits most from their plans and tax cuts, is particularly pertinent, don't you think?

      On National’s Tax Cuts [31 August 2023]
      Revealingly, National’s chart setting out the potential income gains has omitted everyone earning below $30,000 as if they don’t exist – and that’s an accurate reflection of how the “bottom feeders” simply don’t register on the centre-right’s voter radar.

      Today's classroom visitor is Mr Luxon from the National Party
      MR LUXON: If you were naughty you went to boot camp and got scared into being an ordinary hardworking New Zealander. Or you became a bottom-feeder. Don’t become bottom-feeders, boys and girls.

      As it is, I don't trust the Nats – particularly given Willis can't show her working for their foreign buyer tax, aka non-resident speculation tax – seems that "technical numbers" aren't the would-be finance minister's cup of tea. Just how sustainable is this tax anyway, year-on-year? Luxon's "bottom feeders" might be in for a bout of Ruthanasia.

  9. Patricia Bremner 9
    25 September 2023 at 1:30 am

    I am hearing more and more people want change but don't want what is being offered by Nact.

    I just hope the Left get out to vote. 17% of general roll and 27% on the Maori Roll if I remember correctly. Now those numbers could change the outcome and stop the greedies in their tracks. yes