Economic stats don't match reality - BusinessNZ
New Zealand’s economic prospects are improving despite some risks, according to the BusinessNZ Planning Forecast for the December quarter.
But wild swings in results suggest official data may not be very reliable, the business organisation said.
The forecast said that while international markets are still volatile, underpinned by concern about sovereign debt levels, New Zealand’s major trading partners continue to show solid growth prospects - good news for New Zealand commodity producers.
“Recent adverse events such as a significant loss of lambs over spring will have some impact on growth prospects, while the government’s accounts have come under some pressure as a result of one-off bailouts,” it said.
“Standard and Poor’s decision to put New Zealand foreign currency rating on negative outlook stresses the need for the government to get expenditure under control, even if this means making some unpalatable decisions.”
The Forecast incorporates BusinessNZ’s Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures.
The ECI sits at 15 for the December 2010 quarter, up 20 from the previous quarter and up three on a year ago.
However, the commentary from BusinessNZ noted that “A number of indicators have moved wildly around over the past few quarters and in this respect, the latest result, while very positive, should be taken with a healthy grain of salt.
“Some largely unjustifiable swings raise question marks over the quality of some official statistics which have not necessarily reflected market reality over the last year.”
BusinessNZ also criticised the government for failing to implement the reforms recommended by the 2025 Taskforce.
According to BusinessNZ the three areas of government spending that need to be addressed are reform of NZ Superannuation, reducing the fiscal cost of KiwiSaver and reform of the “interest-free” student loans scheme.
To read the full forecast click here.