Robert MacCulloch: The IMF says NZ has the worst Current Account Deficit out of all 40 "Advanced Nations" in the world

Sometimes one does think the Kiwi media are really trying hard to play games with the news. The International Monetary Fund just produced its 'World Economic Outloook". Stuff News said it "has painted a grim picture of the outlook for the global economy over the next few years". The purpose of Stuff's article seems to be to convince the Kiwi public that although our economy is doing badly, so is everyone else's.

That's not the tone of the IMF report, as I read it. It says, "On the surface, the global economy appears poised for a gradual recovery .. China is rebounding strongly following the reopening of its economy. Supply-chain disruptions are unwinding while the dislocations to energy & food markets caused by the [Ukraine] war are receding .. the massive & synchronous tightening of monetary policy by most central banks should start to bear fruit, with inflation moving back toward its targets ... Below the surface, however, turbulence is building & the situation is quite fragile, as the recent bout of banking instability reminded us". That's not exactly "grim". The word "grim" is never used by the IMF.

Had I been a journalist at Newshub, Stuff, or Herald, I would've written about how the IMF says an extraordinary thing about NZ. It states we are projected to have the worst current account deficit out of every single advanced country in the world this year, 2023. That's 40 countries! Take a look at the table below - NZ's current account balance is reported as -8.6 % of GDP, worse than Greece's at -8.0 %, in 2023. That means we're not paying our way. Imports hugely outweigh exports. It also means that NZ has become dependent on foreign debt to finance our investments.


Sources:

https://www.stuff.co.nz/business/300851665/global-economy-in-perilous-phase-imf-says#:~:text=Its%20latest%20World%20Economic%20Outlook,year%20and%204.9%25%20in%202024.

https://www.imf.org/en/Publications/WEO/Issues/2023/04/11/world-economic-outlook-april-2023

Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.