by Rob MacCullough
I can’t make sense of the Finance Minister’s statements Tuesday regards the “Pre-Election Economic and Fiscal Update” by the NZ Treasury. He claims the country is in better shape than expected and that the “forecasts showed New Zealand would avoid recession, with wages keeping ahead of inflation”.
So here’s my question — GDP growth up to June 2024 is forecast to be just over 1% (the forecast has been raised slightly from 1.0 to 1.3%). On the other hand, it is also stated immigration is now running at 100,000 a year, corresponding to an increase in 2% of our entire population. But if total GDP is only growing at a bit over 1% and the population is growing at 2%, then GDP per capita must be declining (since GDP per capita equals total GDP over population size).
In other words, from an individual perspective, we are entering a deep recession. But the Finance Minister says Kiwis are getting better off since our inflation-adjusted incomes are rising. Can a journalist please ask Robertson how GDP per capita, which measures the average income of a Kiwi, is falling based on his own Pre-Election Economic Update whilst at the same time tells 5 million Kiwis that we’re getting better off?
If you don’t believe me, then take a look at the graph of GDP per capita on page 7 of the Treasury’s Pre-election report (see link below). What really blows my mind is the following figure – in particular the black line that shows the amount Kiwis are consuming on a per capita basis, after adjusting for cost-of-living changes: