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.