This week, I joined The Chartered Institute of Logistics and Transport’s Bay of Plenty section on a tour of Port of Tauranga. As one of the largest, busiest and highest volume ports in the country, it was a fascinating behind-the-scenes look at the goings on behind the gates at Mt Maunganui and Sulphur Point.

When our guide commented that the port had noticed the looming economic downturn six months before it hit, I had one question … “Any chance you’ve noticed an upturn yet?” Encouragingly, the answer was affirmative.

And sticking with ships as an analogy, Newsroom today reports “the ship is beginning to turn” on patchy and fragile economic growth. BNZ’s chief economist Mike Jones highlighted “some of the signs of life in the economy” with 10 charts.

“Overall, there’s enough momentum to keep expectations of recovery on the board. Particularly with the Reserve Bank’s recent change in stance in the background.

“But the numbers are still far from leaping off the page – we found the exercise a tad disappointing on the whole,” he cautions.

“The growth that is turning up is quite often from a low base and fragile in nature (with a giant exception for primary exports!),” writes Mike, adding the bank sees Q3 GDP at +0.5% quarter on quarter. The graphs and his explanations of them paint an interesting albeit cautious picture of the positives in the economy right now.

And sticking with ‘interesting albeit cautious’, the ever straight-shooting Cameron Bagrie gave his summation on the country’s economic situation at the Transporting New Zealand North Island Road Freight Seminar last weekend.

“People have been saying it’s the worst economic climate since the GFC. Well, the economy has been hooked up to money policy drugs – when you eat like an elephant, don’t expect to pass wind like a mouse … things have to normalise,” he quipped.

“At the epicentre of any economy is an appetite to take and manage risk, how do we get that back?” he asked. “Our economy is currently ‘two steps forward and one step back’. New Zealand is out of recession, but flat.”

Bagrie highlighted numerous positives … More building consents show the wheels are turning. The Reserve Bank is mildly pushing the accelerator, the recent OCR cut is a bit of a boost, with core inflation down. The business sector is not happy but is optimistic about the next 12 months, taking a glass-half-full view. Commodity price movements have exceeded cost rises, with rural regions leading the recovery – a recovery of substance rather than the traditional borrow-and-spend recovery. Government’s books are still deeply in the red but better than expected, and local government spending has risen rapidly as a percent of GDP.

“There’s an awful lot of stimulus coming through. We need to take a deep breath,” he said.

Of course, he also had a few cautionary words … Net migration and tourism are still down. Price increases are being pushed through. Consumers are not cheerful. Serious structural problems exist that the reserve bank can’t fix – such as deindustrialisation, poor productivity, and education and social issues.

“We need a new growth model prioritising productivity growth, capital investment, natural resources, taking and managing risk, and tough policy calls. We need the business sector to step up. We need bipartisanship across the political spectrum,” he said.

“The government is clubbing seals – bring out the whales. The next couple of years will define New Zealand for the next 10 … we’re focussing on short-termism. We need to have the political preparedness to make the bold decisions. This is a long game.”

Make of all that what you will. Me? I’m going to find the biggest glass I can to half fill.

Take care out there,

Gavin Myers
Editor