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The 2022 Economic Boom

Written By: - Date published: 11:18 am, December 12th, 2021 - 23 comments
Categories: benefits, business, capitalism, Economy, employment, farming, Financial markets, infrastructure, jobs, manufacturing, monetary policy - Tags:

New Zealand is seeing a strong, business-led recovery.

Our interlinked trading partner Australia expects to see similar growth of around 4% over the course of 2022, well above the long term trend.

While there continues to be some COVID-related uncertainty, New Zealand and Australia share some of the highest vaccine protections of anywhere in the world, and the New Zealand ‘traffic light’ system provides for clear operating signals for social and economic behaviours at changing threat levels.

The unemployment and underemployment rate look set to continue to stay into the low 3% with skills shortages almost across the board. That is multi-decade rare.

Homeowners and businesses are well in front of their mortgage payments with low mortgagee and bankruptcy levels.

Coming out of 2021’s lockdowns, consumers are spending, shopping, eating out and taking holidays.

Business confidence and conditions are improving, and most businesses are in good shape. Our constraints are not enough materials and not enough people to do the work. These are markers of a boom.

When the September 2021 quarter figures are released we will see a decline in economic activity, but what happened last time is an even greater spike upwards. 2022 is all about shifting from response to recovery.

Farming in particular dairying is set to receive farmgate prices not seen for decades. With a price closing in on $9 per kilo, the economy is about to get a $13b injection just from Fonterra alone.

Sport – a massive tourism booster – is set to push tourists our way as we host the world cups for Cricket, Rugby and football.

The film industry is accelerating, with the single largest film studio in the southern hemisphere greenlighted for Wanaka.

Housing developments are increasingly masterplanned for quality and well integrated, as the economic strength of Auckland radiates outward.

Sleepyhead Estate | Housing development in Ohinewai, North Waikato.

Motorway congestion is down but trucks for trade and shopping are increasing fast as online shopping and working is up, making for a much more efficient and less energy-wasteful society.

There are plenty of secondary policy questions that flow out of this – like how will government better redistribute this wealth, build high-productivity worker capacity, and how will government spend all the tax it’s making.

But they are primarily around the question: what do you do with success?

23 comments on “The 2022 Economic Boom ”

  1. Siobhan 1

    Whats with this "Business led" recovery…why not just a good old fashioned "Economic recovery"? 'cos you do know business doesn't exist, let alone succeed without Government and 'The People" creating the right environment..despite what the free-market crowd might keep whispering in your ear..

  2. Sanctuary 2

    What do we do with all that success? Whinge and Whine continually that Emma can't find a place in MIQ and give a platform to an endless parade of aging rich white men who are personally furious their jet setting lifestyle has been disrupted and no one is listening?

    • Sarah See 2.1

      Absolutely…. I suspect that even if the current govt did absolutely, everything perfectly right (for everyone – which is fairly impossible) then STILL it would not be enough for some – in fact it would incite MORE hatred.

  3. Blazer 3

    We ignore it all and have the new LOTO opposition regurgitate the usual drivel about …'a rising tide ..lifting all boats'-productivity needs addressing,the amount of borrowing is irresponsible and we can do better,although we won't be drawn on how or…why.

  4. UncookedSelachimorpha 4

    Economic growth is pointless when most of society doesn't benefit.You mention that dairy will add $13b "to the economy", meanwhile fresh water is ruined and dairy wages are kept to the minimum.

    Just today, Labour opens the borders in order to suppress wages in the dairy sector (which is currently experiencing a wages shortage, despite booming milk prices, although the industry, government and media misrepresent it as a "Labour Shortage").

    MIQ exemptions for workers as labour shortage squeezes primary sector

  5. Herodotus 5

    Great to have such a "boom", especially when pay rates have increased 2.4% inflation 4.9% so paid employment means in real terms a 2.5% reduction, the start of increased interest rates. And regarding property price increases.

    In January this year Prime Minister Jacinda Ardern said: "We can't stand by while house prices increase at the unsustainable rates we saw in 2020."In 2020, house prices rose 15 percent nationwide.So far in 2021, house prices have already risen more than that, at 22.8 percent. At the start of this year the average house price was $839,000, and is now $1.03m.Since November 2017, the national average house price has risen 54 percent. The average national house price was $670,000, according to Quotable Value, and is now $1.03m.

    So how will this "Boom" benefit many of us ? as we have been feeling the pain for quite some time. When will we feel that we are financially better than we were in 2017, it at ALL??

    https://www.rnz.co.nz/news/business/457464/house-value-growth-during-three-months-adds-113k-to-auckland-prices

  6. pat 6

    "Our interlinked trading partner Australia expects to see similar growth of around 4% over the course of 2022, well above the long term trend."

    You may wish to google the term "base effect"

  7. Patricia Bremner 7

    Supplies are short world wide. That will push up prices. Councils need to assist Developers and builders by listing suitable replacement materials, and not cause bottle necks.

    • GreenBus 7.1

      We should build houses to what's available, like we did in the 40's and 50's. Home grown timber, knock back the exports keep it domestic. Do we need marble toilets?

  8. Jackel 8

    I guess that on a less and less habitable planet with more and more people with more and more power chasing fewer and fewer resources, that a comparatively natural resource rich country like New Zealand is going to do fairly well economically, at least for a while.

  9. vto 9

    I dont trust this 'boom'. It is driven off pandemic and money supply, both of which are fickle and unusual. Imo it could easily collapse under a similarly fickle and unusual trigger.

    I have peeled my own business back to a trickle

    But,.. to the point of your post – what do we do with a boom? We use it to boost the lower echelons of society so that we become stronger across the board and all New Zealanders are able to have a good and proper life… like the good old days

    this is what we should do

    • RedLogix 9.1

      yes

      Finally a non-whiny, constructive response to this post.

    • Hunter Thompson II 9.2

      Economic history tells us that every boom is followed by a bust.

      There's a huge amount of debt sitting around (remember "quantitative easing"?). That chicken will be looking for a roost soon.

      • Tricledrown 9.2.1

        The 2008 GFC was countered by masses of QE. Inflation wasn't a problem .

        Why because no supply constrictions.

        Now we have supply constrictions across all economies because of Covid.

        Add the oil cartels deliberately reducing supply .

        All economies now face a fine balancing act to stimulate or increase interest rates and stop QE.

        It could take several years for supply lines to recover so its going to be tough.

        The China vs US trade war /empire muslce flexing.

        Russia vs EU.

        Climate changing more rapidly .

        We are entering more turbulent times.

  10. Sanctuary 10

    A lot of talk of inflation, because itscares the beejesus out of the middle class. But if you want to get houses prices down in a relative sense then 5% inflation for four years along with ensuring wages keep up and hose prices stay static will do nicely to chop 20-25% off in real terms. Just saying…

    • Nic the NZer 10.1

      It would seem unlikely inflation sized increases will show up in pay packets. For a long period wages have not increased in line with productivity either, so real wages have decreased over 30 years and to some extent house prices jut out as a result. My expectation is that the bump in prices will be short lived, the UK saw a similar spike after 2008 incidentally.

  11. Sanctuary 11

    If anyone wants to know why liberal centrism is under severe attack in Europe and why people like Eric Zemmour have a good chance of winning power in places like France one graph should explain a lot: – manufacturing collapsed during tee GFC and has never recovered. Spain and Italy look similar.

    The end of the great industrial power: France's car production halved from  nearly 4 mln down to 2 mln

    • Tricledrown 11.1

      Older inefficient industries in Europe closed down.manufacturing moving to cheaper Asian countries.

      That could have a second coming as European manufactured cars are not very reliable ,planes not the same demand.

      Offset by military purchases maybe the only growth area as increasing instability world wide.

      Tourism will be on the backfoot for many years.

      NZ will have problems with inflation running at 5% the govt will struggle to keep that balance .Countries we rely on for our exports will dictate how we perform in the next few years.

      Now NZ is seen as a safe bolt hole housing will continue to be a major concern.

  12. Sanctuary 12

    hmmm, anyone able to edit that for me?

  13. Corey Humm 13

    I'm sorry but this is all a mirage. Whose benefiting from the economic booms? The people with the most who need it the least.

    Im trying to defend this govt because I don't want a nat act coalition with an air NZ boss as PM, bridges as minister of finance and Seymour as deputy pm with huge power going to act… But labours not giving me much to work with here.

    All I know is everytime I go to the supermarket to buy the same things as the week before it costs a little bit extra. my power costs a little bit extra, everything costs a little bit extra , I've gone from having money left over after bills and groceries to having to buy less, use less than I need and it gets me wild with rage everytime.

    My living standards are going down and so are everyone I know, I'm a childless person in my late 20s this should be a great time. Some of my friends who work really good jobs who have no kids are so broke between pay they can't even afford gas to drive to work and pay to park. It's nuts.

    Imagine if we had kids. We'd be buggered.

    Inflation is killing us. The rich are making an absolute killing faster than ever before and we're all suffering. Pay increases don't feel like they are even breaking even with inflation.

    People earning fifty k a year should be able to dream about owning a home one day without thinking it's an impossible fantasy.

    It's actually getting to a point where renting a home is becoming unachievable. Not in auckland, everywhere. Most people I know barely unpack from their house because they know they'll have the house for a year tops or the house will be sold and they'll be out. Trying to get enough money together to pay for an enormous bond and rent agreement.

    Im sick of hearing how great the economy is because while there's loads of money it's not being shared in a way that benefits society and as the pm said what is the point of economic success if it doesn't work for the majority.

    I'm sick of the pm every December saying she hopes house prices don't rise as much as they did the previous year and then sitting on her hands while they break new records every year.

    I'm sick of the PM ring fencing her govt in from doing any meaningful change. This is a pm who once had unprecedented political capital and only ever used it to rule out policies like a Capital gains tax for short term political gain and probably long term political heartache for the party.

    I'm sick of the pm ruling out doing anything truly meaningful on housing because it would be unpopular but willing to squander political capital on incredibly unpopular things that won't systemically change anything.

    This is a pm who so calculatedly ruled out endorsing marijuana reform because it would have cost her a couple seats (though that could have been a good thing in the long term cos they could blame all the lefty stuff on the greens and MMP but now they are doing bugger all and the greens and labour will have nothing much to excited the electorate in 2023) and despite half the country voting in favor and half against and all of parliament pretty much saying they'd support decriminalization, ruling out any marijuana reform the day the results came out and letting down the base. Medicinal weed is impossible to get but this a weird tangent.

    If she can ram through the water reforms and hate speech she can ram through a capital gains tax and a sweep of policies that make renting affordable a political back down is not the end of the world .

    I like the PM I really do, but I think her captain calls have ring fenced the govt from doing any thing meaningful on the things people need, I think her govt has really dropped the ball on poverty and housing and I think 2022 is the last chance for them to start getting serious and think outside the box and indeed change their mind about some of the things they've ruled out.

    Labour and indeed the greens by being with them is losing the room. Reliable labour or green voters, working class and quite liberal people hate labour at the moment and are venomous a lot of these people in their twenties and thirties are labours base and they aren't feeling any benefit from a labour govt.

    All we see is our bills taking more and more and more of our wage, our dreams getting further away from reality the rich getting insanely richer and a govt seemingly oblivious or unconcerned.

    Labour needs to have it's own reset in February. A cabinet reshuffle with 2017-2020 talent coming in and the 2008-2017 underperforming ministers being shown the door.

    In early Feb after kiwi's have had a decent summer and are happier it needs to announce this reshuffle and it needs a great kiwi upgrade style pr blitz and announce some serious transformational policies like I dunno secondary tax, first $20 k tax free, more safeguards for tenants , major reforms to the RMA that allow building faster, easier supply chains for building, a small version of the ministry of works that builds houses on govt land and trains builders and has set house prices and competes with the private businesses for govt contracts, universal dental, free uni for doctors and nurses, allowing students to use the free year of study to pay for a year of their study after the face,adding a second year of uni, rent to own state houses, decriminalization of marijuana and quietly dropping a couple of the controversial potential vote losing policies atleast until after the election

    I really don't know what it would be but a few of those things would be popular and get the millennials and the left back onside.

    They really do need a big reshuffle and big pr blitz after a happy summer with exciting stuff that will be in action before the next election.

    Next year is the last year they can be truly transformational before the election and I fear if they do as they've been doing for four years it'll be the last time we get a chance for a labour govt to do anything meaningful for a long time and if we lose the govt in 2023 the narrative will just be we borrowed lots and did nothing meaningful on the crises NZ already faced prior to COVID and Jacindas legacy won't be anything more than being seen as a let down.

    Labour needs to refresh reboot and do whatever it can to ensure people feel they are getting a head and life's getting better. They've done amazingly well with COVID but winning ww2 didn't get Churchill reelected voters are shortminded.

    If you're still reading this rant good lord.

    But seriously…. Noone I know is benefiting from this economy and most of them won't come out to vote next election if things keep getting worse.

    • UncookedSelachimorpha 13.1

      Excellent comment!

      Inequality is dominating everything – the "economy" is peanuts compared to the impact of inequality. And Labour almost never even talks about it.

    • Molly 13.2

      Agree with Uncooked Selachimorpha. Thanks for taking the time to write.

      I think many share your frustration, I know I do.

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