Danger! The economic bubble is bursting
By Mike Treen, National Director, Unite Union
(Reprinted from The Daily Blog)
Statistics NZ figures released this week have confirmed that New Zealand is in recession on a per capita basis as the economy has declined for two-quarters when measured on this basis.
Gross Domestic Product did grow by .4% in the December quarter 2016 and 0.5% in the March quarter 2017, but because New Zealand’s total population grew by a record 2.1% in the year to March.
Adjusting the GDP growth for population growth produces a negative growth number in both quarters.
The Treasury had predicted just three weeks ago in the budget a 1% economic rise for the March quarter and the number was half that.
The CTU estimates that GDP per hour worked – productivity in the economy – has also declined by 1.3% in the past year.
The economy is simply not working or performing as expected.
The economy has been propped up by property speculation, growing household debt, together with strong immigration and tourism numbers. This has produced economic froth rather than a growth in the real economy.
Workers incomes are also been squeezed. The New Zealand Herald reports today that “Wage growth – as we once knew it – has gone missing in action.” Economists are puzzled by the low wage rises of around 1.6% a year for the last two years when the labour market has been relatively “tight” from their viewpoint. The employment rate is at 76% of working age adults which is relatively high by international standards for an advanced capitalist country. Inflation is now above 2 percent so real wages are declining rather than rising.
The economic bubble is bursting.
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