A former Reserve Bank economist said the numbers from Treasury's Pre-Election Economic and Fiscal Update (PREFU) for 2023/24 "are bad" and neither major party have policies that would shrink the nation's deficit.
The results were made public yesterday, and said that while a long term recession has been avoided, interest rates and inflation is expected to stay high until late 2024.
The unemployment rate – which was 3.6% in June – is currently expected to rise to 5.4% in 2025, meanwhile migration is reaching record highs and filling skills shortages.
Former Reserve Bank senior economist Michael Reddell joined Breakfast this morning, saying that Aotearoa is dealing with "some of the largest deficits in any advanced countries".
"The further up numbers look good, but the only reason they look good is because the Treasury uses spending numbers that [Finance Minister] Grant Robertson's given them and said 'these are our plans for the years ahead'. Treasury themselves comment on the document, 'we don't really believe these numbers, minister'.
"The near term numbers, they're bad, the medium term numbers really never make sense to pay much attention to."
For the next 15 months, Reddell said Kiwis can expect the Official Cash Rate (OCR) to remain high and potentially continue to rise to bring the 2.7% inflation rate forecasted in 18 months down to the Monetary Policy Committee's target of 2%.
He said since the beginning of Covid, there had been "basically no productivity or growth in New Zealand".
"In the last three or four years ... we really haven't achieved any efficiency gains across the entire economy in that time ... it's just not obvious why we'd suddenly start to see that over the next two to three years, and if we don't see that, then we won't see the wage increases that Treasury's forecasting in those numbers."
He noted that record migration had stabilised house prices and filled critical skills shortages, however it may do little to ease the inflation rate.
"Big immigration eases the pressure on individual employers, but on the other hand, migrants spend just like the rest of us.
"So even the Reserve Bank will say they don't think big influxes in immigration really ease the inflationary pressures at all, and they may exacerbate them. It's good that foreigners are keen to come and live here, [but] what's less clear is what it does for our economy in the short term."
He said the rate of population growth is outpacing GDP growth numbers, meaning "in per capita terms, we're getting poorer".
"There aren't really good news stories in these numbers."
Ahead of the October election, Reddell says neither Labour or National's current economic policies are tenable and would not reduce the nation's deficit.
"I don't think either party, whoever forms the government after the election, is going to be in a position to just carry on as they're now telling us in the campaign."
Finance Minister Grant Robertson joined the programme later with a more optimistic view of New Zealand's economic future, most especially in the long-term.
"This set of books shows that over the next four years, the economy's gonna grow on average by about 2.6%, it does show that inflation gets down to that target that the Reserve Bank have for it next year," he said.
"It shows that while unemployment's going to rise, we're still going to add about 100,000 new jobs into the economy over the period that this set of books covers, so there's light there at the end of the tunnel."
Robertson remained confident in the economy further down the line, though acknowledged it had not been kind to Kiwis in recent years.
"It's not to say that things haven't been tough ... because they absolutely have been for households with inflation, but what these books show is the direction of travel is good and we have turned that corner."
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