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.