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  • rmacculloch

Parliament's Finance & Expenditure Committee and the RBNZ: A Fact Check

Stuff News has reported on the Reserve Bank Governor addressing Parliament’s Finance and Expenditure select committee. It quotes him as telling MP's that in NZ, “We have had the strongest operating economy in the globe".

That's news to me. The primary metric used in economics to measure the strength of the economy is GDP. We are very far from having the highest GDP in the world on a per capita basis, let alone, of course, in terms of total GDP. The World Bank publish a list of countries that reports how much their GDP grew over the past year. There is a link below and one can count many countries that have grown faster than NZ.

Take Ireland, for example. A Bloomberg News headline recently screamed "Irish economy defies pandemic to grow in 2020" ... by over 3%. As for our economy, Stats NZ reports that "Average annual GDP declined 2.3 percent through the year to March 2021".

So maybe the RBNZ could tell us in what sense our country has had the "strongest operating economy in the globe". As for longer run growth forecasts, we're looking really bad, since most economies are opening up whilst ours is largely closed, with skill shortages and supply chain problems caused by our highly restricted borders likely to hugely constrain long term growth prospects and also lead to inflation. Not to mention how inequality has been wildly exacerbated by house price rises, a major cause of which has been the RBNZ's own $100 billion Quantitative Easing Program.



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