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Recent releases

Dairy drags down July export receipts The value of exports plunged a seasonally adjusted 7.5% in July, dragged down by rapidly deteriorating dairy and forestry export receipts. Even so, the annual trade surplus still held above $1.2bn, as some large one-off imports from July last year have now fallen out of the annual total. Over the coming months we expect the trade balance to continue deteriorating. Read more

Annual net migration rockets past 41,000 people Annual net migration rocketed to 41,043 people in July, up from 38,338 people in June. This result was driven by a continued decline in permanent departure numbers (down 18% from a year earlier) and still rising arrivals (up by 19%). We expect annual net migration to peak over the coming months as overseas labour markets stabilise. Read more

Commentary

Wafer-thin government surplus still forecast The Treasury released its Pre-election Economic and Fiscal Update (PREFU) this week, showing that the government remains on track to run a surplus in the 2015 fiscal year, despite a slight downward revision to economic growth over the coming year. Nevertheless, The Treasury’s $297m surplus forecast is wafer-thin and was only preserved because of a $281m downward revision to spending in the 2015 fiscal year.
Fighting inequality with minimum wage? By having a minimum wage in New Zealand, we as a society are saying that the free market doesn’t come up with a fair wage when left to its own devices. However, simply raising the minimum wage is not necessarily going to help solve problems of poverty and inequality — and in some ways may harm those we are trying to help. Read more.

New Zealand’s loser towns There has been increasing discussion in the media over recent weeks about the plight of some of our provincial and rural economies.  Shamubeel Eaqub from the NZIER has sparked debate by highlighting the situation and suggesting a greater regional focus in economic policy.  What he is actually advocating in practice is a little unclear given that he says “for stagnating regions we need to build on their capabilities – help where there is a credible chance that the cost of investments will be more than repaid by future benefits” at the same time as saying that “current strategies of investment attraction and picking winners are not working.”  My colleague, Benje Patterson, when writing a few weeks ago, rejected explicit government involvement in propping up businesses in rural areas, stating that “industry subsidies … tend to lead to less efficient resource allocations and weaken overall economic returns in New Zealand.” Read more.

Latest Forecasts

Venturing out of the shadows

The New Zealand economy has well and truly proven it is undead, recording three consecutive quarters of growth above 1.0% for the first time since 2003/04. Strong growth is set to continue over the next two years as domestic demand remains buoyant, the Canterbury rebuild reaches its peak, and export incomes hold at relatively high levels.