NZ one of strongest growing economies – IMF

October 10, 2013

The IMF’s annual World Economic Outlook ranks  New Zealand as one of the strongest growing economies in the world.

It forecasts New Zealand’s growth rate this year to be 2.5 per cent, bettered among the 35 advanced economies only by Israel, Singapore, Hong Kong and Korea. The average for advanced economies in 2013 is just 1.2 per cent.

The IMF expected the growth rate to pick up to 2.9 per cent next year, exceeded only by the same four and Taiwan, and outperforming the advanced economy average of 2 per cent.

New Zealand also looked relatively good on the fiscal front, with a general government deficit of 0.4 per cent of gross domestic product over 2014, compared with an average deficit of 3.5 per cent for the advanced economies as a whole.

Next year’s unemployment rate of 5.3 per cent was not as bad as the 12.2 per cent projected for the euro area, 7.4 per cent for the United States or even Australia’s 6 per cent.

To be fourth in the world is a significant achievement but there is a but:

But the failing grade on the report card was the current account balance: a bottom-of-the-class deficit of 4.2 per cent of GDP this year and next year, worsening to 6.1 per cent by 2018. . .

When Finance Minister Bill English announced this week we were on track to return to surplus he said there was no room for complacency.

Once the books are back in the black reducing debt should be a priority.

That requires building on the foundation of lower government spending and policies which encourage investment, savings and export-led growth rather than higher taxes, borrowing and spending.

Those are National policies.

Most announced by Labour and the Green Party would do the opposite.

The IMF report is here.

 


Boardrooms back Bill

July 25, 2013

Finance Minister Bill English has won well-deserved praise in the Herald’s annual Mood of the Boardroom  CEO’s survey.

Finance Minister Bill English has emerged as the hidden “star” of the Key Government pole-vaulting boss John Key for the second year in a row to emerge as the highest rated Cabinet Minister by leading chief executives.

“Bill English has really been an exceptional Minister of Finance,” said BusinessNZ CEO Phil O’Reilly. “He has been sober, boring and sensible but the macro settings have been just right. He deserves more credit for that.”

English’s “Southland determination” to get the country’s books back into order and “dour, no-nonsense personality” are cited by chief executives as making him the perfect foil for a populist prime minister. “He can just get on with the business,” said a financial markets chief.

The Herald’s 2013 Mood of the Boardroom CEOs Survey, in association with BusinessNZ, found widespread support for English’s management of the economy. . .

This matters.

Businesses which have confidence in the government and the direction in which it is taking the country are more likely to make the investments which boost economic growth and crate jobs.

The Finance Minister’s ability to deliver on his aim to post a Budget surplus in 2014/2015 has been buoyed by growing taxation returns off the back of stronger corporate profits; the proceeds of the partial privatisation programme and a determination to keep government spending under control.

In his post-Budget speech to the Trans Tasman Business Circle John Key spelt out how he would like New Zealanders to remember his government. Key said if the Government can achieve a step change in New Zealand, “in years to come they will say ‘I think that it held its nerve and fundamentally guided us through the global financial crisis and the Christchurch earthquakes and it set the country up to grow during a period of dramatic change in Asia’ and that is going to be a far bigger gift.

“New Zealanders will have jobs and families will have independence.”

That is a legacy every government should aspire to leave.

Seventy-two per cent of chief executives responding to the CEOs survey agreed that the Key-led Government has achieved that positive legacy; 9 per cent said No and 19 per cent were unsure. . .

“Most New Zealanders will not realise until much later what a great job Messrs Key, English and others have done steering New Zealand through the challenges of the last few years,” added First NZ Capital’s Scott St John.

“The way they have protected NZ households by maintaining fiscal discipline and keeping interest rates low has been very important.

“Amazing that we have come through the Global Financial Crisis with a short recession, low unemployment, Government debt at under 30 per cent, credit ratings OK and earthquakes,” added a wholesale trade CEO. “Overall it is impressive stuff. . .

It needs at least one more term to bed in the progress and achieve more.


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