NZ | Economy Thread

[Kiss the Rain]

The problem with the NZ economy is that, in my opinion, people take the amount of readily avaliable jobs(usually low skill) for granted, combined with the safety created by minimum wage act, people lose any innovations to seek higher education and just live in the comfort zone and only take up those unskilled, none to low tech jobs. This is why NZ is so vulunerable to world economic crisis like a sudden drop of world price, we are too dependent on the farming industry and natural resources to create wealth, what with the government being very reluntant to help grow the industrial sector and very poor funding for scientific research.

[SYDNEY]

Confidence at 18 month high

Oct 31, 2006

Business confidence has hit an 18 month high, in the latest National Bank business outlook. Chief Economist Cameron Bagrie says businesses are more upbeat about their own activity. He says firms' profit expectations are also up, boosted by lower fuel prices adding to the discretionary income of consumers.

Bagrie says economic activity is beginning to increase after a lull over most of the year and other confidence surveys also point towards an economy that's reflating. He says the economy is on track for around 2.5% growth.

[heyitsmechris]

Originally Posted by OverseasKiwi

Thats what the PPP adjustment is for. Purchasing Power Parity. The GDP of all the countries are compared to a common Index (or a common basket of goods if you will) To which then their exchange rates and GDP are adjusted to a common factor. The actual GDP/per C may be higher or lower. Using china for instance, they have a low actual GDP per capita (USD) but when adjust for PPP its shoots up by about 20-25%. I can include figures if you want.


Neitzsche. You are correct about NZ being stronger in the 70's. Then because about 70% of trade was to the UK, when they joined the eurozone and barriers shot up, nz hit a recession. Include the fact that there was the oil shock then as well, its was a bad time for NZ. But the same was true for australia. They had a smaller % of their trade to the Uk (about 50%) but it was still a large shock. Yes their mining operations are strong, but low commodity prices in the early 90's and late 80's (aftershocks of the oil hit) did not help them.
The difference between us and the australians are basically size. They have resources that they can sell whilst we dont. The level of internal inequality in NZ and Aus are more or less the same (wage wise, is this what you meant?) but makes no difference. The average wage in australia is still higher then New Zealand.

Becuase of their size, they can build the infrastructure which we cannot, giving them more of an edge. You will notice that the larger countries always do well (bar India but they probably did the biggest economic meltdown in the world in '91, only themselves to blame. ) But basically size = more resources, labour, etc etc. There are a whole lot of other factors(ie good policies, good governence). Basically new zealand in order to compete concentrates on Niche markets, which we excell at. Bio-tech, wine industry, tourism. You will notice that we dont have any large scale manufacturing plants, ie automotive, electronics. We just dont have the scale economies to manage it. Whilst Australia does.




The problem with the income part is that Aus is experiencing an extremely competitive job market, as i've mentioned above. I'm afraid that the recent influx of immigrants from NZ and elsewhere is giving employers more power to dictate wage levels. And of course, for them the lower, the better.

China's GDP is $2.225 trillion US, or $8.859 trillion US when adjusted for PP this is a just under 400% increase as opposed to the "20-25%" you quoted.

[heyitsmechris]

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[Neitzsche]

Originally Posted by heyitsmechris

Not to mention the fact that Australia has a right-wing party which means Capitalism can thrive as opposed to the left-wing regime in New Zealand where Capitalism is being smothered.

Is that really a bad thing? Being a small fish what would stop NZ being smothered by overseas capital buying everything and subsequently all profit being shipped off shore? This one does my head in as I'm for "the market" but, given our relative position of weakness how do we protect from being owned by people who don't live here and who don't give a shit about NZ? Oz at least has the resource base to compete with the big boys. I really struggle trying to figure out where the line should be drawn.

[flyin_higher]

Well in terms of foreign ownership, Aussie already owns 80% of our banks. But thats not necessarily a bad thing, they still invest in NZ (ie; new bank buildings, etc) and we still retain a level of control here in NZ. I'd rather Aussie owned them than the Americans or someone else anyway..

[dubious]

Originally Posted by heyitsmechris

I love the way you compare New Zealand to Luxembourg, I mean the two countries are so alike...one is a couple of small islands out in the middle of nowhere; while the other a piece of land smaller than Rhode Island wedged in between the 3rd, the 6th and the 17th biggest economies in the world, not to mention that 400 million (rich) people live very nearby.

I wasn't comparing NZ to Luxembourg at all. My point was that a large population doesn't directly translate to a successful economy.

[Kane007]

Originally Posted by dubious

I wasn't comparing NZ to Luxembourg at all. My point was that a large population doesn't directly translate to a successful economy.

Luxembourg. Now thats interesting because I remember reading something in Time magazine from the early 90's at the break up of the USSR, that actually stated their economy was no bigger than Luzembourgs and that was with 300m prisoners. The advantages of a centrally planed economy versus a social democratic one.

[Marky Mark]

Strong rise in building consents
31 October 2006

The home building boom is getting a second wind, with rising consent numbers for the past three months, and a 6.1 per cent gain in September.


One bank economist said the recent consents figures suggested the low point in the house building cycle had passed, though interest rates were higher than two years ago.

Statistics New Zealand figures out yesterday showed 2472 consents were issued in September, the most since March 2005.

House building was increasing with growth in net migration and consumer confidence rising to a 13-month high, Deutsche Bank said.

Net migration in the year to September was 13,200, while there were consents granted for almost 26,000 homes.

The latest figures included consents for 493 apartments, almost double the number in the previous two months, and the highest level since February.

The total rise in consents since June was almost 29 per cent, though there is a normal lift in consents and building work in spring.

The 26,000 building consents issued for the year compared with the 32,000 annual peak in 2004, at the top of the building boom.

Excluding apartments, core consents for new homes rose 1.2 per cent in September. That was up more than 5 per cent on a year ago, after a dip earlier this year.

Master Builders Federation chief executive Pieter Burghout said consent numbers and values were holding steady across most industry sectors and regions. Most builders had at least 12 months of committed work, he said.

Overall, the annual year to date construction spending was just more than $11 billion, up 2.1 per cent on the September 2005 year, he said.

The September figures show a strong surge in consents in Auckland, with almost 800 consents issued in the month, up 255 on the same month last year, indicating growth in apartment building plans.

There were 150 consents in the Wellington region, down 110 from the same month last year, though that was an unusually high figure. Wellington City Council staff said building work remained at a "reasonably high level".

ANZ Bank economists said the latest national rise in consents would not be welcomed by the Reserve Bank, which wanted to see a rebalancing away from domestic spending towards exports.

The Reserve Bank would be "especially wary" of any rising trend in consents because that could keep pushing up building costs.

Deutsche Bank chief economist Darren Gibbs estimated the average price to build a home was $1221 a square metre in the three months to September, up 10 per cent on the same period last year.

Latest official inflation figures showed a 6 per cent rise in construction costs.

However, UBS economist Robin Clements said a closing of the gap between demand for new housing and the increased supply of homes was consistent with reduced house price inflation.

"Increased building activity need not be inconsistent with a further cooling in house price inflation," he said.

[heyitsmechris]

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[heyitsmechris]

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[heyitsmechris]

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[heyitsmechris]

Originally Posted by Kane007

Luxembourg. Now thats interesting because I remember reading something in Time magazine from the early 90's at the break up of the USSR, that actually stated their economy was no bigger than Luzembourgs and that was with 300m prisoners. The advantages of a centrally planed economy versus a social democratic one.

Not completely sure what you are saying here...but to me it looks like you are trying to say that after the collapse of the Soviet Union their economy was equivalent in size to that of Luxembourg...is this what you are saying?
Because if it is, then you are clearly mistaken as the USSR would have been manufacturing the value of the Luxembourg economy many times over in weapons alone. And how can a country of roughly 300m have 300m prisoners?

[Kane007]

Originally Posted by heyitsmechris

A large population definately helps...although not as much as a large landmass.

Just like Japan!

[heyitsmechris]

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[OverseasKiwi]

Originally Posted by heyitsmechris

A large population definately helps...although not as much as a large landmass.

india...1billion +

stagnant growth for 40+ years.

[heyitsmechris]

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[Kane007]

Large land mass theory, hmmm.

1 Russia
2 Canada
3 China
4 USA
5 Brazil
6 Australia
7 India
8 Argentina
9 Kazakhstan
10 Sudan

I see atleast 2 of these top 10 that NZ is economically more powerful than.

But the UK, Germany, Switzerland, Austria, Spain, Portugal, Italy, Israel, Sth Korea, Singapore, etc, don't fit anywhere in these top 10 listings, whether by geographical size, population, resources.

[flyin_higher]

Originally Posted by heyitsmechris

Australian owned banks control more of the market share than that, and it's in their best interests to invest in their New Zealand subsidiaries as it increases their bottom line. What's wrong with American ownership?

Just personal preference, mainly to do with relative size and distance

[Kiss the Rain]

Originally Posted by Kane007

Large land mass theory, hmmm.

1 Russia
2 Canada
3 China
4 USA
5 Brazil
6 Australia
7 India
8 Argentina
9 Kazakhstan
10 Sudan

I see atleast 2 of these top 10 that NZ is economically more powerful than.

But the UK, Germany, Switzerland, Austria, Spain, Portugal, Italy, Israel, Sth Korea, Singapore, etc, don't fit anywhere in these top 10 listings, whether by geographical size, population, resources.

Land mass doesnt mean bull if it's not productive, russia has the largest land mass so you would expect them to have the highest agriculture output, but since it lacks the right climate and fertile soil, it doesnt give as much economical advantage as what people think.
Yea, sudan is definitely larger than nz and we are so much richer than them, wow, now we have something to brag about!!!! =_=