Paul Bloxham: HSBC chief economist on how New Zealand can restart a 'rockstar economy'

Ten years ago, New Zealand had a 'rockstar economy' according to experts.

In 2014, New Zealand's GDP growth turned out to be among the strongest across the OECD economies.

HSBC chief economist Paul Bloxham unveiled his tips for how the nation can change its tune and bring those figures back.

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Episode Transcript

Speaker 1 (00:00):
Now the man who coined the term rockstar economy has
got some tips on how we can become a rock
star economy again. He's HSBC Chief economist, Paul Blocks them
over here from Sydney. Paul, Hello, it's nice to see you.

Speaker 2 (00:09):
It's great to be in the studio.

Speaker 1 (00:11):
I'm really interested in your take on this. Now. I
don't reckon we become a rock star economy again if
we just keep doing the same thing.

Speaker 2 (00:17):
What do you think, Well, there's a couple of reasons
why I agree with you. I mean, the first one
is that the world is a different place. It's changed.
You know, when we described the New Zealand economy as
a rock star back in twenty fourteen, the environment was different,
and so a couple of things have changed, and the
geopolitical environment has changed. But the other thing that's changed,
of course, is there's a much much bigger focus globally

(00:38):
on climate policy as there ought to be. So, no,
you can't keep doing the same thing. You have to
move on, you have to adjust. And so then the
question is what ought you do to try to strive
to be that rock star economy again. Well, one thing
that's helpful is that it looks as though the central
bank has broken the back of inflation. Inflation is coming down,
and of course we saw the RBNZ cut rates just

(01:00):
a couple of weeks ago, so you're now down that
pathway of getting a bit more support. But it's also
this means that this is now the right time to
start focusing on what it is you need to do
to start growing in a broad based sense, So looking
at the growth engines that New Zealand's got.

Speaker 1 (01:15):
So the last time we did it was twenty fourteen,
and we did it because we basically had this market
open up to US China and they just bought more
and more and more of our stuff. Do we get
back to the same place by still selling stuff just
selling it to someone else, or do we actually try
to get more sophisticated. Well, you're right.

Speaker 2 (01:32):
So one of the things that happened is obviously the
market opened up to you. You sold more dairy and
meat products into that. You've got more tourists coming through.
There was a booming tourist industry at the time. You've
done a lot of the sorts of things, the backwork
with the free trade agreement and a lot of things
that made the economy more competitive to support those things.
So now you have to look at what the growth
engines are going forward. It still seems to me, at

(01:53):
least that the growth engines are going to be about
selling agricultural products. That's the biggest part of what you do.
It's going to be meat, dairy, it's going to be aquaculture,
it's going to be fruit and vegetables.

Speaker 1 (02:02):
So that leaves us so exposed with climate change, doesn't it?

Speaker 2 (02:05):
It does, But this is the this is the primary
thing that This makes up the bulk of New Zealand's
exports at this point in time. This is a lot
of where you're comparative advantage lies. But the key is
obviously to make those industries as competitive as possible. And
as you're right, you're not going to be aiming at
just any one trading partner. You've got a broad base
set of trading partners to target what you. I think
we need to keep in mind is you know China

(02:26):
is one of those It still is, of course it is.
But of course the rest of Asia is also growing
fast too. Now we can look to India which is rising,
We can look at Indonesia which is growing quickly. We
can look at the asy and countries in general and
as they develop and they've got large populations too, what
sorts of things are they going to want to buy?
And so that's one element. I think. The other element
is reviving the tourism industry more. I mean it's picked

(02:48):
up a lot since, of course the borders reopened and
we've got past COVID and so on, but there's a
lot more that can be done in that space too.
The key is to get the economy to be as
competitive as possible. Yes, to lift productivity and make it
as competitive.

Speaker 1 (03:00):
Why are we so bad at this?

Speaker 2 (03:02):
Well, we need to do. You need to do reforms
that are going to make that productivity left. Well, one
thing you need to do is focus on infrastructure. That's
a part of what you know, we we and you
know I can talk about in New Zealand, but Australia
has had a similar situation. We've underinvested in infrastructure for
such a long period of time that we've got a
large you know, under it, a sort of need for

(03:23):
building even more over time. So that's that's one thing
we can do. We need to be very sort of
clear that we're still attractive to foreign capitals. That's I
think you know the growth opportunities for Australia and for
New Zealand. Open economies that are medium sized in Australia
small here, a small economy. They come from the world.
You've got to keep focusing on growing the economy through

(03:44):
selling things into the global system, so things that attract
foreign capital. We've got to get the settings right in
terms of climate policy so that it balances finds the
right balance between attracting capital, growing the economy and also
achieving the climate goals. These are all not easy things
to do, by the way. I mean they're not. They're not.
That's why if they were easy, they'd be done already.

Speaker 1 (04:03):
But they're the sorts of things.

Speaker 2 (04:04):
You need to You need to focus on growing the
pie so that then you can allocate the pie more
it spread it across the population more.

Speaker 1 (04:10):
Paul, it's good to talk to you. Thank you so
much for coming, and I hope you enjoy your dinner
out in Auckland this evening. I will do give you
a good time. That is Paul Bloxham, h Species chief
economist out of Sydney, Well out of Auckland to night.
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