17 December 2014
We are in that
slide towards the Festive Season where everyone suddenly becomes nice to each
other, where the year’s problems no longer seem as grim or pressing, and where
we start to think about our plans and hopes for next year. Christmas always
seems to usher in a brief period of optimism, which is usually dashed once we
return to work.
This year, there
seems to be a sense that the woes of the Global Financial Crisis are now well
and truly behind us and that there is more hope of some prosperity gains in the
future. But how sustainable are those? Some of the international signs are not
as encouraging as they might first appear, as a quick survey of a few other
economies shows.
In Ireland,
similar in size and type to New Zealand, but one more savagely ravaged by the
GFC, growth is forecast to lift to about 3.5% this year. But that improvement
has hardly led to dancing in the streets. The government is facing a bitter
battle over its water pricing plan, and President Michael D. Higgins recently told
a Chinese audience that Ireland’s modern economic history has been “poverty,
illusory affluence, and poverty.”
In Britain, where
growth is hovering around 3%, Prime Minister David Cameron, facing an uncertain
election in May and the rise of myopic xenophobia in the form of UKIP, is
arguably even more despondent, pointing to “red warning lights flashing on the
dashboard of the global economy”. In the United States, despite his foreign
policy failures and racial discord at home, President Obama appears more
optimistic although still rather cautious, commenting that with growth at 3.9%
the US is “primed for steady, more sustained economic growth.” In Australia,
the Abbott government’s recovery hopes have been knocked by the Budget deficit
blowing out to more than $40 billion. And in the “rockstar” (a term we do not
hear any more) New Zealand economy the prospect of a Budget surplus seems to
have receded, and Mr English restrains himself to saying our growth rate
(similar to the US) means that we are “on track for solid growth.”
Sadly, all of
this means we are not out of the economic woods yet and that prudent fiscal
management and restraint will remain the order of the day for some time to
come. Magic bullets will again be in short supply under the Christmas tree, but
in comparative terms, the performance of the New Zealand economy does give
cause for a little more optimism next year, as Mr English’s comments appear to
imply. So, there is scope for some cheer over the Christmas barbies after all, even
if economic Nirvana is still a little while off.
On that warily
optimistic note, Dunne Speaks takes its leave for 2014. I will be back in 2015
after a few weeks break. In the meantime, my best wishes to all of you for a
peaceful and happy Christmas with those that are nearest and dearest to you,
and my hope that 2015 will enable you to achieve your hopes and dreams. Merry
Christmas!