Opinion Why so gloomy, business?

Christina Leung is the principal economist for the New Zealand Institute for Economic Research. Her organisation studies the national economy, keeps a close eye on key economic indicators and gives regular updates on its health.

There’s been a great deal said in the past few weeks about the health of our economy and, more particularly, the business community’s feelings about that.

Depending on what you read and hear, the economy and the mood that underpins it are variously described as being in a ‘‘funk’’, stagnating, heading for a slowdown and even preparing for some sort of collapse.

Leung herself had some sobering words to impart. In the NZIER’S most recent Quarterly Prediction she even used the word ‘‘stark’’.

Right now, a large number of businesspeople and those who represent their interests are nodding their heads in agreement and shared concern at the dark times approaching.

But we should point out that Leung wasn’t referring to the prospects for the Kiwi economy. Far from it, the NZIER was actually relatively optimistic.

What Leung described as stark was the contrast between sentiment and ‘‘what was actually going on in the economy’’.

And what is ‘‘actually going on in the economy’’ is that it may not be a rock star but it remains a decent, solid support act.

Unemployment has risen a fraction but most other indicators are either stable, healthy or on the up. Trade tensions and the risk of rising interest rates aside, the prospects look good, with GDP tipped to grow 3.3 per cent this year and average 3 per cent over the next five years.

That view has been supported by the Treasury, which has forecast ‘‘a rebound in June exports with high commodity prices’’.

Which makes one wonder if Labour’s Grant Robertson and NZ First’s Winston Peters are right to roll their eyes at the furrowed brows of business confidence surveys.

Especially when the NZIER itself notes that ‘‘businesses have remained downbeat since the election despite demand for their own businesses holding up’’.

Ah, the election. At various times in our history political parties have accused each other of economic treason in talking down or even appearing to undermine the economy. Labour has done it, now it’s National’s turn. John Key helped set the ball rolling with concerns about weakening demand in China, and Simon Bridges has made little effort to halt that momentum.

That appears to be having some influence on elements in the business community who seem more concerned about the Government’s perceived turn left than the more optimistic numbers of trusted economic observers.

We understand their concerns about rising industrial unrest, particularly in the public sector. That may create some uncertainty, but it also means the prospect of hundreds of millions of extra dollars entering the economy. Some will be saved, but much of it will be spent. Surely that is at least one reason for some optimism.