- we're technically out of recession, with actual GDP growth
- the Cullen Fund bounced back from its earlier losses to post healthy gains in the later part of the financial year
- Fonterra announced an increase in the payout forecast, meaning dairy farmers will have more cash in their pockets
- Our current account deficit has shrunk significantly.
- the GDP growth was only 0.1%. Better than negative, but still flat
- imagine how much happier the taxpayer might have been with the Super Fund result had the miserable Nats not suspended all contribution payments. They say they can't afford to put money into the fund unless they borrow. There are two schools of thought on this issue. One says you never borrow to invest, ever. The other says you buy up big when the market's at the bottom. This "recovery" might prove to be a false one, but if it really is the beginning of something, the Nats may well be ruing their decision to suspend contributions
- the Fonterra payout is a projection only. Dairy prices are still highly volatile
- the shrinkage in the current account deficit was partly due to a large one-off tax payment by the BNZ, and due to lower returns on investments by overseas investors. Hardly matters to get excited over.
- the NZ dollar is way too high. It was trading above US73c earlier today. Exporters are suffering enormously, and this affects every sector of the economy. The dollar rises and falls, staggering about like a drunk man. And the NZD is one of the top eight currencies traded in the world, even though we're a miniscule economy by world standards. Clearly we're at the whim of currency speculators. I don't know what the answer is, not being one of those fancy-pants economologists, but surely we need to look at some form of currency control, or at pegging our currency to a less volatile one. But that won't happen - not in the short to medium term. Our PM used to buy and sell money, and is unlikely to support any form of currency control. But we should at least be prepared to talk about the idea
- we're addicted to real estate. There's no easy fix to this. A capital gains tax might help, but it's unlikely to itself be enough. And it would be political suicide for any party to introduce, unless the other main party agreed to go along with it. Labour has indicated it's prepared to talk about the issue, but John Key has more or less rubbished the idea
- there are few incentives to invest in research and development. The R&D sector has been starved for years. And both political parties are at fault. Labour at least had the sense to introduce an R&D tax credit, but the accountants who run National Party policy squashed that fast. The Government's approach to innovation has, it's fair to say, been underwhelming.
We'll probably muddle along, as we always do. The trouble in this country is we don't have the visionaries in power prepared to lead us in the right direction. And that's not a dig at the Nats, because Labour didn't exactly shine a light.
Even if the recession is over (and I'm yet to be convinced), I predict a long period of minimal growth and tepid business confidence.
But then economics is basically crystal-ball gazing, so I could be hopelessly wrong. If I am, don't be too hard on me. I'm not paid a cent to write this stuff. Most of the economists we hear daily in the news media are hopelessly wrong all the time, and yet we still listen to them.
But I'm not personally worried. Powerball's at $20 million this Saturday, and I'm pretty sure I have the winning numbers.