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  • rmacculloch

The future of the Kiwi economy, by Led Zeppelin: "Yes, there are two paths you can go down".

It's a fool's game making economic & political predictions, since things change by the day. But recent events have revealed more about how the next year may play out for the Kiwi economy. This past year has been defined by the alignment of good economic with good health outcomes due to our community elimination of the virus. That situation smashed the political divide. It meant the left could argue its policies not only protected health & well-being, but also promoted business interests at the same time. This view gained traction and devastated support for the right.

But it's now looking like this alignment is about to brutally fall apart. Skill shortages, supply chain & travel disruptions, cost-of-living inflationary pressures and more are worsening due to our strict border controls. Interest rates are on the way up. And we went into the present lock-down with over $50 billion more public debt than the one last year. Continuing with elimination is looking like imposing huge long-run economic costs.

On the other hand, a learning-to-live-with-the-virus policy, whilst better for the economy, holds the risk of spinning out of control from a health perspective. The chances of an outbreak that overwhelms the capacity of our health system, even with a high vaccination rate, still appears significant. But the government has not put a figure on how likely it is for such a thing to happen. Should that awful event occur, those promoting an end to elimination may well be blamed for pushing a policy that caused loss of life.

Kiwis are divided right down the middle on which of these two paths to go down. So shows a recent poll. Leaving our economic future mired in a seemingly unresolvable sea of uncertainty. Caught between a rock and a hard place.


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