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The fundamentals of New Zealand’s economy are sound


November 14, 2008/2.41

[Cross-posted] As I call in around New Zealand to different companies, I have noticed a few things. First, the General Election has made no real difference to the way people feel. It’s no surprise: voted the same way as Helen Clark on many of the least popular pieces of legislation, and fewer people trusted him yet wanted him in office. I also wonder if the US presidential election, having had such a grand effect on people around the world, caused our own to be such an anticlimax.
   Secondly, people are still hurting out there . Every day the tell them that things are bad. And as a result consumer confidence gets driven down. Yet I wonder how much of this is real.
   The usual indicators of petrol prices and are good. Granted, our petrol prices have not fallen as much as in the US: Stanley Moss, CEO of the Medinge Group, notes that it has dropped US$1. Ours have dropped between 50 and 60 cents. So why are we feeling the pinch this badly?
   Our exposure to world markets has been limited. We have been simply lucky that even our have not had a tough time relative to the US. The links between them have not been that strong, so their exposure to the mess there has not been that great.
   Even our Australian-owned banks have had relatively minimal exposure. It would have been worse had Lloyds TSB held on to the National Bank, but it didn’t. They only say they’re hurting because they haven’t been able to screw as much out of us as we go to TSB (no relation to the UK one!) and Kiwibank.
   Under Labour, there has been more of an emphasis on culture over the , at least in its first term. In many respects, we have been shielded, more by accident than design.
   House prices are on the rise again, too.
   The troublesome industries are tourism, which is no surprise and never has been to me, but that will likely readjust as our Australian neighbours might consider New Zealand again; and automotive, as people hang on to their cars for a little longer.
   Exporters are hurting, too, and I am one of them. But I think many of us were prudent, too, about whom we dealt with, and while the Labour government embraced Red China with open arms, hopefully enough of us have held back on depending on a communist nation going through its share of troubles.
   What is hurting is the failure to communicate the positive elements of the economy—because many in the are technocrats who are not fans of a strong . And bad news makes some people feel important.
   They would rather we be weakened so our companies can continue to be acquired by foreign interests that see New Zealanders as units of production to be exploited.
   So if it’s doom and gloom for their way of life, we are told that it’s doom and gloom for ours.
   We’ll pull through this because we haven’t pursued technocratic, monetarist policies with the fervour that we did in the 1980s under the reforms of the Architect of Doom, Roger Douglas.
   The last nine years have not been great under a government that failed to generate real growth in or support small businesses that had potential to create .
   However they have also been less technocratic than the nine years before that.
   National did some things in the 1990–9 term that interestingly paved the way for that buoyed the start of the 21st century, admittedly going against what I have been saying is healthy for us. Yet the other indicators have been less optimistic, such as our failure to pay for free education, rising crime and a growing gap between rich and poor—things that Labour has failed to repair but at least it was aware of the problems. National was less aware back then.
   Consequently, we have not been as exposed to foreign financial woes as greatly as we could have been.
   All we need to do now is wake up to these basic facts. Among ourselves, we can keep trade moving. And I know we can do it. After all, we haven’t had much support from government for a while anyway, so we’re used to fixing our own problems.

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Filed by Jack Yan

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