OECD growth forecasts show NZ is in good shape - report

Finance Minister Grant Robertson says New Zealand is in good shape.
Finance Minister Grant Robertson says New Zealand is in good shape. Photo credit: Newshub.

Over the next two years, world growth is expected to remain stuck at around 3 percent, amid stagnating global trade, low confidence and reluctance to invest: but that's not the case in New Zealand.

The latest Organisation for Economic Cooperation and Development (OECD) economic outlook puts New Zealand's growth forecast ahead of seven other countries we traditionally compare ourselves against, including Australia, Canada, the US, the EU, Japan, Norway and Sweden.

The OECD group of 36 economies is forecast to grow between 1.6 and 1.7 percent on average across each of the three years from 2019-2021.  By comparison, the New Zealand economy is forecast to grow between 2.4 and 2.7 percent annually across the same period (2.70 percent in 2019, 2.48 percent in 2020 and 2.37 percent in 2021).  

Finance Minister Grant Robertson said New Zealand's economy is in good shape - growth will remain steady and business investment is set to expand.

"Our economic outlook is stronger the countries we traditionally compare ourselves against," Robertson said.

Although the US-China trade war, Brexit and geopolitical tensions in the Middle East have had an impact locally, countering the negative global situation, New Zealand has low interest rates, low unemployment and low Government debt.

"Looking backwards, economists are picking the September quarter was softer in terms of growth.

"But it's been good to see [recent] signs of the economy picking up again towards the end of the year, underpinned by the investments the Government is making," Robertson said.

Recent 'good news' includes expansion of service and manufacturing industries, the third-lowest unemployment rate, coupled with the highest wage growth in a decade.

"The Government is supporting the economy with our Economic Plan," Robertson said. 

"We're making record infrastructure investment in regional roads and rail, backing businesses to innovate and grow through [research and development] and boosting the wages of working New Zealanders through the minimum wage and Families Package." 

The OECD covers 36 countries that collaborate on key global issues, from North and South Amercia, to Europe and Asia-Pacific.  While global growth figures are boosted by parts of Africa and other countries that have high growth rates due to young populations coupled with low standards of living, the OECD comparison looks at New Zealand alongside other advanced economies.

For each of the three years from 2019-2021, economic growth in Australia is forecast to be between 1.7 and 2.3 percent, while expectations for Canada are between 1.5 and 1.7 percent each year and for the US, between 2 and 2.3 percent each year. 

For the Euro area, Japan, Norway and Sweden, economic growth forecasts for each of the three years are pinned between 0.6 and 2.4 percent, with Norway given greatest scope for growth.