Read the introduction to the International Monetary Fund's Global Economic Outlook published last month. It says, "despite a sharp & synchronized tightening of monetary policy around the world, the global economy has remained unusually resilient throughout the disinflationary process, avoiding a global recession. Growth is projected to hold steady at 3.2 percent in 2024 & 2025, even though a few countries, especially low-income developing ones, have seen sizable downside growth revisions, often as a result of increased conflicts". Is the RBNZ living in a parallel Universe?
The two statements are opposites. Amazingly, incredibly, the IMF says just a few "low-income" nations have revised growth down, mainly because of wars, making NZ one of a tiny group of non-low income nations, without a war, that is languishing in recession after recession. The IMF ranks us 181 out of 190 nations in terms of GDP growth. Meanwhile, our Central Bank gives a completely - absolutely - totally different impression of the truth. What astounds me most about the RBNZ's Monetary Policy Statement is that it says, "Slower growth in government spending, falling net immigration & subdued global growth are also dampening demand" in NZ.
Look at Table 7.4 of the Policy Statement. Get out your glasses & look at the numbers the Bank's hiding in small print that report components of GDP for 2024 (private consumption, government consumption, investment & net exports). Of those, investment is down -2.1%. Plummeting investment has caused our Gross National Expenditure to fall by -1.5%. Now look at exports which are up a whopping 8.4% - the biggest rise over the 10 year time span of the Statement. Its due to that rise NZ is not mired in even deeper recession. The RBNZ says "subdued global growth" is hurting "demand" in NZ. That's a lie. The global economy is growing at 3.2% & our exports are up sharply due to high overseas demand. Furthermore, whether or not the NZ government is "dampening demand" as the Bank says depends on the size of the deficit (spending-taxes). In 2024 Table 7.5 reports it is -2.5% of GDP, falling to -2.8% next year. That's more expansionary than 2023 and their average is more expansionary than any year since 2017 - that is, these past 6 years - with the one exception being 2020 when the pandemic broke. Government spending maybe rising more slowly - but the Coalition trimmed taxes - and so it has not "dampened demand". It has increased it.
The Monetary Policy Statement's lines that the NZ economy is weak because the global economy has hurt our exports and our government is choking demand are a pack of lies - and lies with a motive: to shift blame for NZ's atrocious performance from the Reserve Bank's staff onto others to save their careers & reputations. The Bank blew up the previous Labour government by "engineering a recession" and now's blowing up the Coalition by blaming the Finance Minister for weak demand when the facts speak otherwise.
The Reserve Bank is now an institution built on bull. Board Chair, Neil Quigley's, term was extended by Finance Minister Willis and Bob Buckle has just had his Monetary Policy Committee Membership extended. Both presided over the Bank's "engineered" recessions & money printing program that fueled inflation. When will this NZ "never step down no matter how big the cock up" culture & inbred Wellington appointments club end? Before the last election, Labour Leader Hipkins told Mike Hosking's radio show that NZ was the world's second fastest growing economy. Isn't it time to end the spin, PR, comms & marketing games put into our politics by Jacinda Ardern, who tried governing us on that basis alone? Can't the Reserve Bank stop putting itself up and the nation (and world) down with its distorted drivel - so NZ can unite, fix its problems, move on and start booming?
Sources:
https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/monetary-policy-statements/2024/nov-271124gsp/mps_report_nov2024.pdf
https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024
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.
The two statements are opposites. Amazingly, incredibly, the IMF says just a few "low-income" nations have revised growth down, mainly because of wars, making NZ one of a tiny group of non-low income nations, without a war, that is languishing in recession after recession. The IMF ranks us 181 out of 190 nations in terms of GDP growth. Meanwhile, our Central Bank gives a completely - absolutely - totally different impression of the truth. What astounds me most about the RBNZ's Monetary Policy Statement is that it says, "Slower growth in government spending, falling net immigration & subdued global growth are also dampening demand" in NZ.
Look at Table 7.4 of the Policy Statement. Get out your glasses & look at the numbers the Bank's hiding in small print that report components of GDP for 2024 (private consumption, government consumption, investment & net exports). Of those, investment is down -2.1%. Plummeting investment has caused our Gross National Expenditure to fall by -1.5%. Now look at exports which are up a whopping 8.4% - the biggest rise over the 10 year time span of the Statement. Its due to that rise NZ is not mired in even deeper recession. The RBNZ says "subdued global growth" is hurting "demand" in NZ. That's a lie. The global economy is growing at 3.2% & our exports are up sharply due to high overseas demand. Furthermore, whether or not the NZ government is "dampening demand" as the Bank says depends on the size of the deficit (spending-taxes). In 2024 Table 7.5 reports it is -2.5% of GDP, falling to -2.8% next year. That's more expansionary than 2023 and their average is more expansionary than any year since 2017 - that is, these past 6 years - with the one exception being 2020 when the pandemic broke. Government spending maybe rising more slowly - but the Coalition trimmed taxes - and so it has not "dampened demand". It has increased it.
The Monetary Policy Statement's lines that the NZ economy is weak because the global economy has hurt our exports and our government is choking demand are a pack of lies - and lies with a motive: to shift blame for NZ's atrocious performance from the Reserve Bank's staff onto others to save their careers & reputations. The Bank blew up the previous Labour government by "engineering a recession" and now's blowing up the Coalition by blaming the Finance Minister for weak demand when the facts speak otherwise.
The Reserve Bank is now an institution built on bull. Board Chair, Neil Quigley's, term was extended by Finance Minister Willis and Bob Buckle has just had his Monetary Policy Committee Membership extended. Both presided over the Bank's "engineered" recessions & money printing program that fueled inflation. When will this NZ "never step down no matter how big the cock up" culture & inbred Wellington appointments club end? Before the last election, Labour Leader Hipkins told Mike Hosking's radio show that NZ was the world's second fastest growing economy. Isn't it time to end the spin, PR, comms & marketing games put into our politics by Jacinda Ardern, who tried governing us on that basis alone? Can't the Reserve Bank stop putting itself up and the nation (and world) down with its distorted drivel - so NZ can unite, fix its problems, move on and start booming?
Sources:
https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/monetary-policy-statements/2024/nov-271124gsp/mps_report_nov2024.pdf
https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024
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.
1 comment:
Professor MacCulloch, Is the Minister of Finance Willis really capable and on top of her porfolio or just coasting , procrastinating along with bluffing though prepared speeches ? We need to know because taxation is from our earnings and endeavour , We deserve the best.
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