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Paul Bloxham: Are we on track to become a rockstar economy again? · The SME Stream

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  Speaker 1: Now, I think we can all agree that survived till
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  Speaker 1: twenty five turned out to be a bit of a
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  Speaker 1: dud slogan as the economy struggled all along along all
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  Speaker 1: of this year. So we'll stay in the mix until
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  Speaker 1: twenty six turn into a dud as well. Or do
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  Speaker 1: we actually believe these green shoots stories. Paul Bloxham as
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  Speaker 1: hspc's chief economist, regular on the show. He's been traveling
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  Speaker 1: the country all week high Paul, Welcome.
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  Speaker 2: To the studio.
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  Speaker 3: Great to be here.
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  Speaker 2: It's lovely to have you, now, are you? I mean
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  Speaker 2: you are pretty confident about next year. We've been talking
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  Speaker 2: about this all year, right, that's right.
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  Speaker 4: Well, we thought in New Zealand's economy would pick up
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  Speaker 4: a little bit more strongly this year. It's taken just
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  Speaker 4: a bit longer to arrive than we had in mind,
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  Speaker 4: and of course the RBNZ and because of that has
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  Speaker 4: ended up delivering more easy cutting by another seventy five
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  Speaker 4: basis points. But that just adds a bit more fuel
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  Speaker 4: to this story as far as we see, and we
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  Speaker 4: do think that growth will pick up fairly solidly into
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  Speaker 4: the last part of this year and running into twenty
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  Speaker 4: twenty six.
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  Speaker 3: As well.
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  Speaker 4: Think we think the green shoots are there and things
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  Speaker 4: are looking a bit brighter in New.
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  Speaker 5: Zealand, matching Australia.
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  Speaker 4: Look, we think that New Zealand because it has had
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  Speaker 4: such an extended period I mean three years of no
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  Speaker 4: growth in New Zealand. In effect, there's a lot of
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  Speaker 4: scope for things to pick up, and so we're forecasting
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  Speaker 4: that growth will be stronger in New Zealand next year
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  Speaker 4: than than Australia. I mean, Australia's got different issues. Australia
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  Speaker 4: has no lack of demand. We've got plenty of demand.
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  Speaker 4: We just haven't got enough supply. The economy can't grow
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  Speaker 4: a much faster. In fact, it's probably already growing a little.
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  Speaker 3: Faster than it is sustainable.
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  Speaker 5: So no, we think New Zealand's going to have a stronger.
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  Speaker 2: How much faster are we growing than aussy?
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  Speaker 4: In our forecast next year GDP growth in New Zealand
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  Speaker 4: is about two and a half percent and in Australia
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  Speaker 4: is two point one just over too. So you know,
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  Speaker 4: we're not talking about miles away, but we are talking
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  Speaker 4: about after three years of essentially no growth in New Zealand,
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  Speaker 4: you start to have a better time should.
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  Speaker 2: At least stop the brain drain type thing.
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  Speaker 5: Well, you know, so this is the this is one
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  Speaker 5: element of that story.
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  Speaker 4: Once the economy starts to get going and firms start
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  Speaker 4: to do a bit more hiring and the labor market
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  Speaker 4: starts to tighten up, that'll keep a few more people
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  Speaker 4: here and it will bring back a few more people
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  Speaker 4: from Australia. And if Australia's story is one where actually
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  Speaker 4: it just can't keep growing or needs to even slow
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  Speaker 4: down a bit because well you're already running up against
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  Speaker 4: your capacity constraints, then New Zealand's going to start to
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  Speaker 4: look a bit more attractive.
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  Speaker 3: And that's the story we've got in mind.
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  Speaker 2: Do we ever get back to being a rock star
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  Speaker 2: economy again?
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  Speaker 4: I think, as I said to you maybe before when
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  Speaker 4: you've asked me this question, yeah, I think you need
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  Speaker 4: to aspire to try and be a rock star. I mean,
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  Speaker 4: when we talked about that rockstar idea, which has got
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  Speaker 4: momentum of its own, and this is back in twenty fourteen,
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  Speaker 4: you were the fastest growing economy in the developed world
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  Speaker 4: in that particular year, and so we marked it out early.
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  Speaker 4: We got that call right, and of course it's had
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  Speaker 4: a life of its own. So the question now is
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  Speaker 4: can you have the strongest economy across that set of
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  Speaker 4: countries again?
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  Speaker 5: And I think, well, we'll see, you should.
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  Speaker 3: Aspire to it.
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  Speaker 2: You with a hope you may.
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  Speaker 4: I think you're in an upswing, as I say, I think,
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  Speaker 4: I think there's some green shoots.
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  Speaker 3: Things are looking brighter.
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  Speaker 4: And you know, we'll as we get into next year,
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  Speaker 4: if we get a little bit more menum, we'll have
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  Speaker 4: a think about how much wronger you can be.
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  Speaker 1: I was at a thing a couple of months ago, right,
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  Speaker 1: and we had a look at our relative There was
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  Speaker 1: a chart up on the projector and it was our
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  Speaker 1: relative prosperity in New Zealand and contrast to you know,
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  Speaker 1: other developed countries. And really in the last probably you
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  Speaker 1: could say six seven decades, we have slipped further and
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  Speaker 1: further back in terms of our GDP per capita or
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  Speaker 1: our relative wealth per person. So it seems to me,
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  Speaker 1: actually the path that we're on is not actually get it.
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  Speaker 1: It's not growing us in the way that we want
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  Speaker 1: to grow per capita. So what do we need to
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  Speaker 1: do here, Paul? Do we need to do something fundamental
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  Speaker 1: in this economy, something like Ireland or Singapore, which are
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  Speaker 1: being talked about.
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  Speaker 4: You need to do as much reform as you can
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  Speaker 4: that attracts as much investment into the places you need them.
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  Speaker 4: I mean, when you need to work on the supply
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  Speaker 4: side of your economy as well.
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  Speaker 2: Would you go as hard as slashing the corporate tax
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  Speaker 2: right here?
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  Speaker 4: I think that it's something should be on the agenda
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  Speaker 4: that tax reforms should definitely be part of part of
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  Speaker 4: the mix.
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  Speaker 2: I mean, would you go as low as fifteen?
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  Speaker 4: What you're effectively doing is looking to open up the
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  Speaker 4: economy as much as possible, not just to local investors
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  Speaker 4: but also global investors as well.
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  Speaker 2: Would you go as low as fifteen?
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  Speaker 3: I think that, you know, it just depends.
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  Speaker 4: I mean these the numbers we haven't got sort of
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  Speaker 4: specifics on, but I think you need to look really
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  Speaker 4: hard things like tax reform that could potentially make it
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  Speaker 4: more attractive to invest here. I think infrastructure has still
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  Speaker 4: got to be a focus. I mean, the big one
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  Speaker 4: of the really interesting growth stories that's going on in
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  Speaker 4: Australia that's really just getting started and actually hasn't got
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  Speaker 4: enough attention yet is the data center build out and
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  Speaker 4: the AI story and the software export, software license export story.
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  Speaker 4: So Australia's got this little tech story that's actually still
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  Speaker 4: quite small but growing quite quickly, and there's really no
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  Speaker 4: reason why New Zealand couldn't be on that sort of
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  Speaker 4: story as well. So there are growth engines you can see,
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  Speaker 4: but you need to be attractive to that local and
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  Speaker 4: global industrial So the reason I brought up.
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  Speaker 1: This chart is that what had showed me was that
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  Speaker 1: we were It felt to me like the tinkering that
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  Speaker 1: we're at at the moment.
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  Speaker 2: A little bit of.
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  Speaker 1: Reform here, a little bit of reform cutting some red
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  Speaker 1: tape that's really like what we need. The way that
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  Speaker 1: we're slipping backwards actually needs some fundaments, really bold, really
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  Speaker 1: bold ideas. Am I just getting way over my skis
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  Speaker 1: here or do you agree?
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  Speaker 3: No?
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  Speaker 4: You need to do you need to focus on supply
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  Speaker 4: side reform. I think there's been some that's been moving
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  Speaker 4: in the right direct. You describe it as tinkering, but
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  Speaker 4: I think it is moving in the right direction. But
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  Speaker 4: you need to have as bolder ideas as you can
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  Speaker 4: possibly manage to deliver because you've got to attract more investment,
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  Speaker 4: you've got to expand the capital stock, you've got to
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  Speaker 4: focus on lifting productivity in New Zealand as well. I've
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  Speaker 4: spent a lot of time talking about how much Australian
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  Speaker 4: needs to do that, and they're not doing enough and
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  Speaker 4: hence they're hitting their capacity constraints. New Zealand's got that
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  Speaker 4: as an agenda too. But actually the primary agenda for
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  Speaker 4: New Zealand of late has been pump priming demand, actually
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  Speaker 4: getting the economy and getting confidence to improve and getting
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  Speaker 4: things to turn around. I think that's starting to get underway,
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  Speaker 4: and then of course a long way along that, a
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  Speaker 4: long way. At the same time, the simultaneous focus ought
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  Speaker 4: to be on these supply side issues, and as you
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  Speaker 4: head towards an election next year, this ought to be
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  Speaker 4: something that's very much in focus as well, should be.
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  Speaker 2: Talking about it.
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  Speaker 1: Yet now this is the last time I'm going to
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  Speaker 1: talk to you before Christmas, So Merry Christmas and what
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  Speaker 1: are you doing.
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  Speaker 4: I'm going to spend Christmas in Western Australia where I'm from.
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  Speaker 4: Actually I grew up in Perth, and we're going to
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  Speaker 4: go home and spend time with my family. It's going
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  Speaker 4: to be a couple of weeks of hopefully putting down
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  Speaker 4: all the tools and not getting involved.
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  Speaker 5: It's very hard for me. I really love what I do,
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  Speaker 5: but I.
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  Speaker 1: Need to get your take on something you said you
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  Speaker 1: take in a couple of weeks off. We discussed this
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  Speaker 1: on the show yesterday whether our summer holidays are getting
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  Speaker 1: too long? Are they getting too long in New Zealand?
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  Speaker 1: Is it a problem for productivity?
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  Speaker 4: I think it's great that we have a pause and
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  Speaker 4: we get to do a reset. This is important for everyone,
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  Speaker 4: and it's good that we do it collectively. I think
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  Speaker 4: that's an important feature. And like other regions do this too.
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  Speaker 4: Europe it's always, you know, July and August, they have
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  Speaker 4: a long stretch where everyone gets to sort of unwind
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  Speaker 4: and come back fresh. So I think that this is
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  Speaker 4: just a part of what we do down here in
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  Speaker 4: the Antipodeans is have our summer break over.
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  Speaker 3: A Listmas time.
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  Speaker 2: That's what I think.
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  Speaker 1: Merry Christmas, thank you, thank you so much, Paul, appreciate it. Okay,
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  Speaker 1: Paul blocks some agspecies Chief Economists. For more from Hither
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• 6:46
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