The latest GDP figures are awful. the Reserve Bank had predicted 0.9% growth in the June Quarter. It came in at 0.2% – far worse than anyone expected and slower than population growth, so economic production per person declined. Revisions out previous data show the recession was 0.15 deeper than thought and the recovery has been 0.1% weaker. We don’t know the impact of the Christchurch Earthquake, that’ll be included in the September Quarter figures out in December.
The Key government’s reaction? Peddling more spin on cyclepaths that have been re-announced time and again, and simply don’t constitute a serious response to our economic crisis. A government that wanted to continue to impove the livings standards of its people would not have the delusion that international tourists are going to flock to here to ride on cyclepaths as its central economic policy. Cyclepaths are awesome but they are not an economic plan.
GDP per capita is still 4.2% below where it was when the recession started and has recovered a meagre 0.6% since the recession officially ended a year and a half ago.
Normally, economies bounce back out of recession as quickly as they went down, making use of idle capital and labour to regain lost ground. That’s not happening because the underlying economic problem – peak oil – is a new kind of constraint, one that this government is unwilling to address or even acknowledge for ideological reasons.
A clued-up government would be looking at the oil price trajectory, looking at the trajectory of transport demand and canning all new motorway projects now. It would then put the money into public transport, rail, more efficient shipping, renewable energy, and energy-efficency while we can.
Update: Bill English has tried his hand at some spin too, saying 0.2% growth is a good thing.
“Statistics New Zealand GDP data issued today shows the economy grew by 0.2 per cent in the June quarter. This took annual real GDP growth to 1.9 per cent – its highest level for two years.”
Nope. The annual growth rate is the year to June 2010 vs the year to June 2009 and that was 0.7%, below population growth. English’s 1.9% is the June Quarter 2010 vs June Quarter 2009 – he’s selected it because it looks good but it’s misleading to compare two quarters in isolation and it’s not annual growth, as he claimed.
“Total domestic spending fell slightly. By contrast, export volumes have increased 7 per cent from their lows of 2008 and they had their second strongest quarter on record… This trend towards saving and exporting more, and spending and borrowing less, is what New Zealand needs to build stronger long-term growth.”
See New Zealand, you’re getting poorer but it’s a good thing. Actually, gross national expenditure went down because inventories were run down, not because we consumed less – we exported more but also consumed more and and didn’t produce much more, making up the difference by running down inventories and importing more.
“The tax changes will boost New Zealand’s longer-term growth prospects”
And what’s the source for that? Well, there isn’t one. It’s just a claim English made up. The Tax Working Group report makes no statement on any enhancement to growth from the tax scam.