HSBC says NZ will be rock start economy of world in 2014

January 7th, 2014 at 1:00 pm by David Farrar

CNBC reports:

New Zealand will be the “rock star” of 2014, with growth set to outpace most of its developed markets peers, according to HSBC, a stark contrast with neighboring Australia, which is struggling to maintain economic momentum.

“We think New Zealand will be the rock star economy of 2014. Growth is going to pick up pretty solidly this year,” Paul Bloxham, chief economist for Australia and New Zealand at HSBC, told CNBC Asia’s “Squawk Box” on Monday.

The question is whether one thinks it would do better with policies of tax more, borrow more and spend more. I don’t.

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44 Responses to “HSBC says NZ will be rock start economy of world in 2014”

  1. Brad (75 comments) says:

    You are nothing if not an exceptional partisan David

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  2. skyblue (206 comments) says:

    But I thought we live in the worst economy in the world. Pissy pants Norman and Cuntliffe will still spout this nonsense. Also, we have extra potential with O&G also to diversify our offering incase logs/coal/milk go down in value.

    Vote Cuntliffe get Norman.

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  3. labrator (1,849 comments) says:

    Happy New Year Cunliffe.

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  4. YesWeDid (1,044 comments) says:

    Does this mean the economy is going to blow all its money on drugs and alcohol and be dead at age 27 choking on its own vomit?

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  5. NK (1,138 comments) says:

    This will keep our dollar high and therefore the OCR will remain low, despite the squawkings from the Reserve Bank.

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  6. Sam Buchanan (502 comments) says:

    “The question is whether one thinks it would do better with policies of tax more, borrow more and spend more. I don’t”

    The article says:

    “Government spending growth rose to 2.2 percent on-quarter in the July to September period, from 0.1 percent in the second quarter, contributing to the economy’s pickup in the quarter. ”

    Government spending – particularly on construction – and low interest rates encouraging consumption leading to a boost in the general economy. Sounds all a bit Keynesian doesn’t it?

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  7. NK (1,138 comments) says:

    Sam, can you find the quote from the article that mentions tax increases and borrowing? DPF did mention all three.

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  8. Psycho Milt (2,368 comments) says:

    The question is whether one thinks it would do better with policies of tax more, borrow more and spend more. I don’t.

    Really? According to HSBC, the current government’s policies of taxing more, borrowing more and spending more will make us the “rock star” economy of 2014…

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  9. tvb (4,259 comments) says:

    For some this means we can afford another Labour Government that will spend it all until the money runs out.

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  10. flash2846 (228 comments) says:

    This is not an isolated pat-on-the-back regarding our economy under the current leadership; New Zealand is commanding a lot of international respect and I for one am proud of this fact.

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  11. hj (6,754 comments) says:

    “housing is booming”
    ……….

    what’s good for the economy isn’t necessarily good for everybody. A bank yes.

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  12. Longknives (4,686 comments) says:

    What what about all those poor children living in ‘Poverty’ while Mum spends her DPB on Pokies?
    Oh the humanity! Won’t someone think of those children?

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  13. RF (1,348 comments) says:

    But but but but .. Labour told me that our economy is ruined and that we are doomed without their intervention. What shall I do.

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  14. Sam Buchanan (502 comments) says:

    “Sam, can you find the quote from the article that mentions tax increases and borrowing?”

    Nope. But I have a hunch that the increase in government spending isn’t being funded as a result of fairies leaving pots of gold around the Beehive.

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  15. Keeping Stock (10,184 comments) says:

    The question is whether one thinks it would do better with policies of tax more, borrow more and spend more. I don’t.

    A big-spending, high-taxing, big-borrowing LabourGreenNZFirstMana government would kill New Zealand’s economic recovery in its tracks. Here’s hoping that is not our reality post-election.

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  16. Psycho Milt (2,368 comments) says:

    This is not an isolated pat-on-the-back regarding our economy under the current leadership.

    The article notes the causes of the expected growth to be the Christchurch rebuild, a new property bubble and rising international dairy prices. I’d be interested to hear the mechanism by which you imagine the “current leadership” has engineered these circumstances.

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  17. Manolo (13,517 comments) says:

    The unholy alliance of socialist Labour and communist Greens would break the NZ economy in less than two years.

    A calamity, although a real possibility, hence the need to do whatever it takes to block Silent T’s ascent to power.

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  18. Sam Buchanan (502 comments) says:

    Thank God we don’t have a government that believes in borrowing its way out of trouble.

    http://www.stuff.co.nz/national/politics/9380846/Public-debt-climbs-by-27m-a-day

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  19. Sam Buchanan (502 comments) says:

    I notice my comment about government spending increases not being funded by fairies has been downticked – does that mean somebody thinks (or knows) that the government IS being funded by fairies?

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  20. Weihana (4,496 comments) says:


    There are three key factors supporting faster expansion, said Bloxham.

    The first is spending on construction, including the rebuilding of Canterbury region that was ravaged by an earthquake in February 2011.

    Why wait for another earthquake? Lets bulldoze Wellington now and make our economy even stronger!

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  21. srylands (392 comments) says:

    “Thank God we don’t have a government that believes in borrowing its way out of trouble.”

    Are you being deliberately obtuse? The alternative would have been to cut government spending by a further $27 million a day. If they had done that, the left would have wailed and screamed.

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  22. Fisiani (996 comments) says:

    Sam
    Economics 101
    If your income is $100,000/yr and you spend $110,000/yr the you need to borrow $10,000/yr.
    The New Zealand economy under Labour was spending far more than it earned. It was unsustainable as always happen when Labour is thrown out. Cutting government spending savagely to meet national income would have meant cutting pensions, reducing benefits, closing hospitals, stop any building and laying off tens of thousands of people. Unacceptable to Bill English and John Key.
    Some time this year or next due to the fabulous efforts by Sir (surely) Bill in saving the economy NZ will be earning $112,000 and spending $111,000. That will then allow us to ease off on the borrowing.

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  23. JeffW (324 comments) says:

    Manolo, downticked incorrectly, should be an uptick. Sorry about that.

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  24. Psycho Milt (2,368 comments) says:

    The New Zealand economy under Labour was spending far more than it earned.

    This must come as shocking news to Nat MPs like J. Key and W. English, who regularly berated the Labour government for not implementing tax cuts to reduce its budget surpluses.

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  25. Weihana (4,496 comments) says:

    Fisiani (780 comments) says:
    January 7th, 2014 at 2:38 pm

    Sam
    Economics 101
    If your income is $100,000/yr and you spend $110,000/yr the you need to borrow $10,000/yr.
    The New Zealand economy under Labour was spending far more than it earned.

    Labour enjoyed budget surplus while in power and debt as a percentage of GDP reduced.

    http://www.tradingeconomics.com/new-zealand/government-budget
    http://www.tradingeconomics.com/new-zealand/government-debt-to-gdp

    It was unsustainable as always happen when Labour is thrown out. Cutting government spending savagely to meet national income would have meant cutting pensions, reducing benefits, closing hospitals, stop any building and laying off tens of thousands of people. Unacceptable to Bill English and John Key.

    It’s unsustainable… yet it’s also unacceptable to stop? Seems a little contradictory.

    Some time this year or next due to the fabulous efforts by Sir (surely) Bill in saving the economy NZ will be earning $112,000 and spending $111,000. That will then allow us to ease off on the borrowing.

    What efforts in particular? Was the Christchurch earthquake on purpose? :)

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  26. Psycho Milt (2,368 comments) says:

    A big-spending, high-taxing, big-borrowing LabourGreenNZFirstMana government would kill New Zealand’s economic recovery in its tracks.

    Hang on – a big-spending, high-taxing, big-borrowing NationalACTUnitedFutureMaoriParty government has apparently made us a “rock star” economy, so surely those are good things?

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  27. Nostalgia-NZ (5,045 comments) says:

    An interesting trifecta, farming, an earthquake a housing boom (or was that crisis) – take 2 away and the money on the nose seems to be where it has always been farming.

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  28. srylands (392 comments) says:

    “The New Zealand economy under Labour was spending far more than it earned.”

    “”This must come as shocking news to Nat MPs like J. Key and W. English, who regularly berated the Labour government for not implementing tax cuts to reduce its budget surpluses.””

    I assume you are deliberately appearing to be stupid. Under Labour core Crown expenses increased by 50%. The surpluses were acheived DESPITE this, through high taxation. When revenue dried up in the recession, the shit hit the fan. The current government has reduced the structural deficit by tackling spending, while avoiding austerity. At the same time the government has improved the efficiency of the tax system. I would argue that they could have done more on both spending and taxes, but they are politicians and will do what they think the electorate will tolerate.

    The aggregate charts here tell the story nicely.

    http://www.treasury.govt.nz/budget/2013/execsumm/02.htm

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  29. Colville (2,198 comments) says:

    Liarbore “allowed” personal debt to go up by something like 60% on their watch. All that money got borrowed from banks and spent on shit. A lot of it got spent on housing. Liarbore reaped the GST and income tax from that boom. They spent the lot, and more and left the cupboard bare and a few (like ACC) potholes for the incoming caretakers. NZ was going backwards well before anyone else. Late 2006?

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  30. Colville (2,198 comments) says:

    Nostalgia @ 3.05
    Tree farming is in boom times too which helps, and a LOT of wood is comming up to being ripe for picking.
    All good news for lil ole NZ :-)

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  31. Jack5 (4,911 comments) says:

    Let’s hope he’s right, but the banks (and HSBC is one, of course) these days are the kings of economic hype.

    Don’t forget 40 years of balance-of-payments deficits. If they ended this year, that would be marvellous.

    Colville (3.11) can relax. He’ll make more from his trees if the economy tanks and the kiwi dives (provided Asian demand for Pinus radiata crap holds up of course).

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  32. Weihana (4,496 comments) says:

    srylands (126 comments) says:
    January 7th, 2014 at 3:05 pm

    When revenue dried up in the recession…

    The recession was Labour’s fault? In what way was the recession linked to New Zealand government spending?

    …the shit hit the fan

    That’s a bit dramatic. I didn’t live through the Great Depression but from pictures it doesn’t look anything like the last five years.

    The government borrowed money as it should. You seem to assume that but for Labour’s spending revenue wouldn’t have dried up. You don’t seem to have considered that such spending ends up contributing to government revenue.

    The aggregate charts here tell the story nicely.

    Indeed. Expenses go up sharply due to the recession which has nothing to do with either political party.

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  33. Sam Buchanan (502 comments) says:

    “Are you being deliberately obtuse? The alternative would have been to cut government spending by a further $27 million a day. If they had done that, the left would have wailed and screamed.”

    Nope, just amused by the blind party loyalty – National borrowing Good! Labour borrowing Bad!

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  34. wikiriwhis business (3,883 comments) says:

    HSBC is one of the bigeest criminal entities in the world.

    They were in the centre of the Libor rating scandal and help

    impoverish the Brit economy severly. Their bankers should have been jailed

    along with Timothy Geitner who was legally supposed to inform on their financial terroism but instead warned them to

    tone things down.

    HSBC along with the Bank of Scotland were named as banks that should be closed down as unfit and no fiscal/professional confidence.

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  35. wikiriwhis business (3,883 comments) says:

    ‘The current government has reduced the structural deficit by tackling spending, while avoiding austerity.’

    Thanks to the Oz economy keeping us afloat. Thier mining industry has just released optimistic stats

    despite coming under severe duress fromover taxation from Keysnian terroist govts.

    Who knows where the direction will go once the TPP has been signed and a whole new economic ball game takes over.

    Just when the motors running well too!

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  36. wikiriwhis business (3,883 comments) says:

    ‘Nope, just amused by the blind party loyalty – National borrowing Good! Labour borrowing Bad!’

    Are we still borrowing 250 mill per week plus interest ?

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  37. Jack5 (4,911 comments) says:

    Relevant to this thread: an interesting article on US and British recovery models versus those imposed in the European Comunity

    http://www.spiegel.de/international/europe/draghi-faces-dilemma-at-ecb-as-europe-looks-to-solve-crisis-a-942004.html

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  38. Psycho Milt (2,368 comments) says:

    I assume you are deliberately appearing to be stupid. Under Labour core Crown expenses increased by 50%. The surpluses were acheived DESPITE this, through high taxation.

    Your definition of stupid appears to be broken. What you’re saying here is that Labour spent a lot, but still wasn’t spending more than it earned because, er, it was also earning a lot. The point being (you are following the discussion, right?) the “wasn’t spending more than it earned” bit.

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  39. srylands (392 comments) says:

    “The point being (you are following the discussion, right?) the “wasn’t spending more than it earned” bit.”

    You can drop the smart arse act. So what? There was too much low quality spending. Expenditure on education increased by more than 50% for zero return on student acheivement. It was simply swallowed by the teachers.

    The last Government had a once in a generation chance to create a low tax, low spending government and to reform welfare when employment was strong. They did not do that.

    So don’t be a smart arse. A drover’s dog could have acheived Budget surpluses in that decade.

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  40. Psycho Milt (2,368 comments) says:

    Blah blah blah. Point made was that the last Labour government was not spending more than it earned, it was in fact in surplus most years. You’re attempting to dispute that point by demonstrating how the last Labour government didn’t spend more than it earned and was in surplus most years – so you can hardly blame me for a sarcastic response. Your opinions on the quality or lack thereof implicit in the last Labour government’s spending has a relevance approximating to 0.

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  41. Sam Buchanan (502 comments) says:

    “A drover’s dog could have acheived Budget surpluses in that decade.”

    Exactly – when Labour creates budget surpluses, it’s purely good luck, when National does (or doesn’t), it’s good management. We should therefore vote Labour to ensure better luck :)

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  42. Nostalgia-NZ (5,045 comments) says:

    Colville. 3.45. I generally included forestry as farming, harvesting from the sea – muscle and oyster farms, agriculture, etc noting particularly now with interest the maturing pine – knowing a few contractors in the industry who are flat tack either felling or transporting whole logs. I said a trifecta earlier but farming is far less a gamble than ‘housing’ or relying on unfortunate disasters. Heard that privately mined coal is going into NZ Steel so the wheel may be turning as the economy adjusts to fending off cheaper overseas products by getting smarter with producing, handling, mining, growing what ever… of what we have here. I didn’t really support some of the tactics of the POA before, during and since the strike – but that conflict is symbolic of the writing on the wall, better and smarter – everyone needs to adjust and veterans of the last 5 years are unlikely to be big borrowers in the future – at least in the short to medium term. Maybe that will translate into other industries and kiwis factories will be making quality products to give the punters a choice of buying something that will last for years compared to something that may already be broken in the box – who knows, it’s worked before.

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  43. wat dabney (3,724 comments) says:

    it was also earning a lot

    Isn’t that a nice way of putting things? When the government forcibly takes people’s money it is “earning it.”

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  44. OneTrack (2,837 comments) says:

    pm – “I’d be interested to hear the mechanism by which you imagine the “current leadership” has engineered these circumstances.”

    I know, lets change the government and put it to the test. What could go wrong?

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