Robert MacCulloch: Has Grant Robertson got a hole in his forecast for 5 million Kiwis....

.....but not for 100,000 immigrants?

I can't make sense of the Finance Minister's statements today regards the "Pre-Election Economic and Fiscal Update" by the NZ Treasury. He claims the country is in better shape than expected and that the "forecasts showed New Zealand would avoid recession, with wages keeping ahead of inflation".

So here's my question - GDP growth up to June 2024 is forecast to be just over 1% (the forecast has been raised slightly from 1.0 to 1.3%). On the other hand, it is also stated immigration is now running at 100,000 a year, corresponding to an increase in 2% of our entire population. But if total GDP is only growing at a bit over 1% and the population is growing at 2%, then GDP per capita must be declining (since GDP per capita equals total GDP over population size).

In other words, from an individual perspective, we are entering a deep recession. But the Finance Minister says Kiwis are getting better off since our inflation-adjusted incomes are rising, so everything is hunky dory. Have I missed something? It doesn't add up. Can a journalist please ask Grant Robertson how GDP per capita, which measures the average income of a Kiwi, is falling based on his own Pre-Election Economic & Fiscal Update numbers whilst at the same time he tells 5 million Kiwis they are all getting better off?

No one feels they are getting better off. I reckon the Finance Minister is telling a porker.

Sources:
https://www.rnz.co.nz/news/political/497824/election-2023-pre-election-economic-and-fiscal-update-release-government-books-in-better-shape-than-expected

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 - where this article was sourced.