Latest / Best of Business / Paul Bloxham: HSBC chief economist on how New Zealand can restart a 'rockstar economy'

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Paul Bloxham: HSBC chief economist on how New Zealand can restart a 'rockstar economy' · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. It'd be
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  Speaker 2: Now, the man who coined the term rockstar economy has
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  Speaker 2: got some tips on how we can become a rock
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  Speaker 2: star economy again. He's HSBC Chief Economist Paul Bloxham over
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  Speaker 2: here from Sydney. Paul, Hello, it's nice to see you.
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  Speaker 3: It's great to be in the studio.
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  Speaker 2: I'm really interested in your take on this.
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  Speaker 1: Now.
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  Speaker 2: I don't reckon we become a rock star economy again
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  Speaker 2: if we just keep doing the same thing.
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  Speaker 3: What do you think, Well, there's a couple of reasons
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  Speaker 3: why I agree with you. I mean, the first one
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  Speaker 3: is that the world is a different place.
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  Speaker 2: It's changed.
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  Speaker 3: You know, when we described the New Zealand economy as
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  Speaker 3: a rock star back in twenty fourteen, the environment was different,
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  Speaker 3: and so a couple of things have changed, and the
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  Speaker 3: geopolitical environment has changed. But the other thing that's changed,
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  Speaker 3: of course, is there's a much much bigger focus globally
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  Speaker 3: on climate policy as there ought to be. So no,
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  Speaker 3: you can't keep doing the same thing. You have to
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  Speaker 3: move on, you have to adjust. And so then the
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  Speaker 3: question is what ought you do to try to strive
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  Speaker 3: to be that rock star economy again. Well, one thing
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  Speaker 3: that's helpful is that it looks as though the central
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  Speaker 3: bank has broken the back of inflation. Inflation is coming down,
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  Speaker 3: and of course we saw the RBNZ cut rates just
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  Speaker 3: a couple of weeks ago, so you're now down that
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  Speaker 3: pathway of getting a bit more support. But it's also
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  Speaker 3: this means that this is now the right time to
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  Speaker 3: start focusing on what it is you need to do
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  Speaker 3: to start growing in a broad based sense. So looking
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  Speaker 3: at the growth engines that New Zealand's got.
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  Speaker 2: So the last time we did it was twenty fourteen,
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  Speaker 2: and we did it because we basically had this market
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  Speaker 2: open up to US China and they just bought more
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  Speaker 2: and more and more of our stuff. Do we get
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  Speaker 2: back to the same place by still selling stuff, just
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  Speaker 2: selling it to someone else, or do we actually try
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  Speaker 2: to get more sophisticated. Well, you're right.
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  Speaker 3: So one of the things that happened is obviously the
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  Speaker 3: market opened up to you. You sold more dairy and
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  Speaker 3: meat products into that. You've got more tourists coming through.
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  Speaker 3: There was a booming tourist industry at the time. You've
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  Speaker 3: done a lot of the sorts of things, the backwork
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  Speaker 3: with the free trade agreement and a lot of things
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  Speaker 3: that made the economy more competitive to support those things.
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  Speaker 3: So now you have to look at what the growth
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  Speaker 3: engines are going forward. It still seems to me, at
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  Speaker 3: least that the growth engines are going to be about
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  Speaker 3: selling agricultural products. That's the biggest part of what you do.
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  Speaker 3: It's going to be meat, dairy, it's going to be aquaculture,
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  Speaker 3: it's going to be fruit and vegetables.
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  Speaker 2: So that leaves us so exposed with climate change, doesn't.
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  Speaker 3: It It does, But this is the primary thing that
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  Speaker 3: This makes up the bulk of New Zealand's exports at
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  Speaker 3: this point in time. This is a lot of where
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  Speaker 3: you're comparative advantage lies. But the key is obviously to
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  Speaker 3: make those industries as competitive as possible. And as you're right,
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  Speaker 3: you're not going to be aiming at just any one
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  Speaker 3: trading partner. You've got a broad base set of trading
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  Speaker 3: partners to target. What I think we need to keep
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  Speaker 3: in mind is, you know, China is one of those
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  Speaker 3: It still is, of course it is, But of course
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  Speaker 3: the rest of Asia is also growing fast too. Now
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  Speaker 3: we can look to India which is rising. We can
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  Speaker 3: look at Indonesia which is growing quickly. We can look
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  Speaker 3: at the asy and countries in general, and as they
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  Speaker 3: develop and they've got large populations too, what sorts of
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  Speaker 3: things are they going to want to buy? And so
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  Speaker 3: that's one element.
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  Speaker 2: I think.
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  Speaker 3: The other element is reviving the tourism industry more. I
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  Speaker 3: mean it's picked up a lot since, of course the
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  Speaker 3: borders reopened and we've got past COVID and so on,
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  Speaker 3: but there's a lot more that can be done in
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  Speaker 3: that space too. The key is to get the economy
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  Speaker 3: to be as competitive as possible. Yes, to lift productivity
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  Speaker 3: and make it as competitive.
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  Speaker 2: Why are we so bad at this?
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  Speaker 3: Well, we need to do. You need to do reforms
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  Speaker 3: that are going to make that productivity left. Well, one
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  Speaker 3: thing you need to do is focus on infrastructure. That's
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  Speaker 3: a part of what you know, we we and you
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  Speaker 3: know I can talk about in New Zealand, but Australia
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  Speaker 3: has had a similar situation. We've underinvested in infrastructure for
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  Speaker 3: such a long period of time that we've got a
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  Speaker 3: large you know, under it, a sort of need for
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  Speaker 3: building even more over time. So that's that's one thing
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  Speaker 3: we can do. We need to be very sort of
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  Speaker 3: clear that we're still attractive to foreign capital. That's that's
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  Speaker 3: I think, you know, the growth opportunities for Australia and
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  Speaker 3: for New Zealand open economies that are medium size in
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  Speaker 3: Australia small here, a small economy. They come from the world.
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  Speaker 3: You've got to keep focusing on growing the economy through
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  Speaker 3: selling things into the global system, so so things that
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  Speaker 3: attract foreign capital. We've got to get the settings right
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  Speaker 3: in terms of climate police so that it balances finds
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  Speaker 3: the right balance between attracting capital, growing the economy and
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  Speaker 3: also achieving the climate goals. These are all not easy
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  Speaker 3: things to do, by the way. I mean they're not.
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  Speaker 3: They're not. That's why if they were easy, they'd be
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  Speaker 3: done already.
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  Speaker 2: But they're the.
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  Speaker 3: Sorts of things you need to You need to focus
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  Speaker 3: on growing the pie so that then you can allocate
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  Speaker 3: the pie more it spread it across the population more.
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  Speaker 2: Paul, it's good to talk to you. Thank you so
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  Speaker 2: much for coming, and I hope you enjoy your dinner
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  Speaker 2: out in Auckland this evening. I will do give you
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  Speaker 2: a good time. That is Paul, Bloxham h Species, Chief
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  Speaker 2: Economist out of Sydney, well out of Auckland to Night
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  Speaker 2: normally in Sydney.
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