The Monitor economy Q&A: Kevin Bowler
Large parts of the economy are being stimulated by domestic consumption, which feels it is unsustainable, says Kevin Bowler.
Each week Stuff asks New Zealand’s business and community leaders how they think the economy is going, and what they believe are the biggest challenges.
Kevin Bowler took over as chief executive of meal kit company My Food Bag from cofounders Cecilia and James Robinson in 2018, and oversaw its transition to a listed company in March.
Bowler says large parts of the economy are currently being stimulated by domestic consumption following the Covid-19 pandemic, and he feels that is unsustainable.
He is concerned about labour shortages and expects wages to move higher.
It’s amazing to think how much the economic outlook has lifted during the last 12 months. But it is important to remember that large parts of the economy are currently being stimulated by domestic consumption. This feels unsustainable to me for the medium to long term.
Consumption in the economy has been affected by our inability to travel for leisure, low interest rates, high levels of employment, and an elevated willingness to consume stimulated by a ‘use it or lose it’ mindset emerging from the pandemic. This has driven high levels of demand for property and other big-ticket purchases, which I don’t believe we can sustain long term at the same rate.
So the outlook for our economy is good, but we have a few more hurdles to navigate before we are completely out of the woods.
What are you most concerned about right now?
The labour market is a concern for many businesses. We should all anticipate inflationary pressure from upward wage movements.
Of equal focus for me is talent shortages across the country. Low immigration levels are compounding this pressure across all levels. But we’re particularly feeling it in areas contributing to higher productivity, such as technology. Shortages of talent initially drive up costs, then ultimately, slow businesses down when they cannot source enough of the right people to capitalise on growth opportunities.
What has the last year taught us about the New Zealand economy?
There’s no doubt that last year confounded many forecasters. It’s taught us how resilient we can be in the short term.
Are you optimistic or pessimistic about the economy this year? Why?
I remain optimistic about the New Zealand economy, but wary that the fundamentals need improvement. We need to sustain export growth for our high value products, recover services exports (e.g. international visitors, international education), and improve productivity measures.
What is the biggest challenge facing New Zealand?
We need to extract ourselves from short-term thinking and take a strategic view on national priorities.
If I were to focus on one strategic priority, it would be to tackle the long-term benefits of deeper investment in education. Whilst all education is inherently good, my bias is to platforms that drive productivity gains. We should be up weighting support for access to the sciences, maths and engineering fields.
Improving education outcomes over time improves health and wellness, occupational outcomes and employment participation. This, in turn, lifts productivity resulting in us working smarter, not just harder, to sustainably improve standards of living.
– The Monitor is Stuff’s unique set of insights to help the business community better understand the economic landscape, and maximise their success. Alongside the quarterly snapshot is an economic index showing the speed of growth.