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Forget the nonsense from Ardern and Robertson: New Zealand’s economy a shadow of its former self

26/06/2022

This is according to Bryce Wilkinson after looking at the IMD Report.

Bryce Wilkinson at NZ Initiative (H/T David Farrar)

Wilkinson pulls no punches:

Paul Bloxham, HSBC’s chief economist, once described New Zealand as a “rockstar economy”. That was back in January 2014. Today, there is nothing “rockstar” left about the New Zealand economy, unless you have Ozzy Osbourne in mind.

Oops, but wait as they say in the TV ads, there is more:

For more than three decades, the Swiss Institute for Management and Development (IMD) has compiled annual rankings of competitiveness for 63 of the world’s most important countries. It makes for sobering reading for New Zealanders.

Back in 2017, New Zealand ranked #16 – ahead of Australia at #21.

Five years on, New Zealand has fallen to #31, while Australia is now ranked #19.

That’s right we have fallen since the year that Ardern gained power 15 places. !5 places, from being in the top third, albeit at the bottom end, to the mid-point.

Note per IMD

The IMD World Competitiveness Yearbook (WCY), first published in 1989, is a comprehensive annual report and worldwide reference point on the competitiveness of countries. It provides benchmarking and trends, as well as statistics and survey data based on extensive research. It analyzes and ranks countries according to how they manage their competencies to achieve long-term value creation. An economy’s competitiveness cannot be reduced only to GDP and productivity because enterprises also have to cope with political, social and cultural dimensions. Governments therefore need to provide an environment characterized by efficient infrastructures, institutions and policies that encourage sustainable value creation by the enterprises.

Note that comment because I consider it highly relevant, especially

Governments therefore need to provide an environment characterized by efficient infrastructures, institutions and policies that encourage sustainable value creation by the enterprises.

I would suggest that this government fails significantly in this regard.

In addition:

The World Competitiveness Ranking is based on 333 competitiveness criteria selected as a result of comprehensive research using economic literature, international, national and regional sources and feedback from the business community, government agencies and academics. The criteria are revised and updated on a regular basis as new theory, research and data become available and as the global economy evolves.

Wilkinson then notes:

A closer look reveals the factors behind New Zealand’s plummeting ranking.

Over the past few years, we have plunged in economic performance, falling from 22nd to 47th place. Government efficiency has also deteriorated markedly from 7th to 17th place.

That’s not a record for this government to feel proud of.

Indeed, we should not feel proud at all. In fact we should be ashamed. Forget the platitudes mouthed by Ardern, Robertson and their sycophants. We have not performed, especially when you look at our digital competitiveness ranking see below.

I would note that we did not do that well in the 64 nation study of digital competitiveness – The World Digital Competitiveness Ranking – Measuring the capacity and readiness of economies to adopt and explore digital technologies for economic and social transformation – the 2021 report had NZ at 22. The 2017 report had us at 14. Frankly, in a fast moving sector that is a very substantial fall. Our performance not helped by government policies at all.

Then just as we might hope for relief, Wilkinson comments:

And it gets worse.

Worse, how can it get worse you might say, well

Altogether, the IMD’s ranking comprises 25 subcategories. In eight of them, New Zealand finds itself in the bottom half of all countries. And these are the categories that really matter: domestic economy, international trade and investment, inflation, productivity and efficiency, attitudes and values, and technological infrastructure.

Note that readers – In eight of them, New Zealand finds itself in the bottom half of all countries

Wilkinson goes on

The IMD noted New Zealand going in the wrong direction on subsidies, inflation, tourism, brain drain, public finances, skilled labour, competent senior managers, and central bank policy.

Not good, not good at all. Yet still Robertson likes to tell us how well we are doing. Hmm!

Here is a snapshot from the report

Very concerning

Wilkinson writes:

As shocking as it is to see the IMD’s assessment, if we are honest, none of this should surprise us.

We know that our public finances are not in good shape.

We have observed the erratic behaviour of the Reserve Bank.

We are watching the onset of a new brain drain to Australia and the rest of the world.

We have seen how Covid has decimated our once thriving tourism industry.

And we feel the effect of inflation every time we fill our cars or do the weekly shopping.

Yet we seem only to get platitudes and happy talk from Ardern & Co. There seems to be little hard analysis, at least in the MSM, which of course is muzzled by the PIJF and far too busy writing about Neve’s birthday cake.

Then as Bryce Wilkinson notes:

Where the IMD’s competitiveness ranking holds up an external mirror to us, Westpac’s Consumer Confidence Survey, released this week, shows that Kiwis also understand how dire our economic situation has become.

Consumer confidence in New Zealand now stands at the lowest level since that survey began in 1988. And, perhaps most damningly, for the first time, a majority has a negative 5-year outlook on the economy.

These are not just signs of a small downturn. These are signs of a former rockstar in a policy-induced coma.

Bryce Wilkinson discusses New Zealand’s economy on Newstalk ZB’s Early Edition 17 June 2022

Indeed as Wilkinson concludes;

These are not just signs of a small downturn. These are signs of a former rockstar in a policy-induced coma

Unless the key factors are addressed we will continue to decline. Indeed as Wilkinson says we are in a policy-induced coma, the implication being that we did much of this to ourselves.

I suspect I will return to this topic.

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