In a post-Global Financial Crisis (GFC) world, New Zealand’s economy has soldiered ahead many of its peers. In 2014, it was famously dubbed the “rock star economy” by HSBC’s chief economist.
But as headline growth raced forward, productivity – also referred to as GDP per capita – has stalled and has been lacking for years.
GDP per capita remained at just 0.1% in the last quarter.
It is an issue well canvased by politicians, with the finance-focused MPs on both sides of the political divide wading into the issue countless times.
The problem is so apparent that in 2011, the then National Government set up the Productivity Commission to figure out how to fix it.
“New Zealand’s poor long-run productivity performance has puzzled domestic economists and international observers for decades,” says its Director of Economics and Research Paul Conway.
Conway is the author of a new report that seeks to address this issue and work out what is holding New Zealand back from reaching its productivity potential.
And it is clear from his work that this is a multi-faceted issue.
Over the years, it’s clear to see how far New Zealand has fallen.
In 1950, GDP per capita was roughly 125% of the OECD average. Today, it’s closer to 60% – less than half of what it once was.
New Zealand’s productivity levels have been well below the OECD average for some time now.
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