Liam Dann: GDP cuts through gloomy business outlook

Prime Minister Jacinda Ardern. Photo / File

Opinion

COMMENT:

Today's strong GDP number seriously undermines the gloomy economic narrative that has dogged the Government this year.

Yes the data is historic - for the quarter to the end of June - and yes it still adds up to slower annual growth than we had at the peak of this economic cycle in 2015 and 2016.

But regardless, it is the strongest single quarter of growth the country has experienced in two years.

That's the headline that went out to the world on international business wires.

It is a timely reminder that things have not been nearly as bad as business confidence surveys and Government critics have been making out.

I don't want to dismiss the policy fears that business groups have expressed.

I don't think small businesses are making up concern about labour laws, rising costs or tighter profit margins.

But I do think those concerns been blown out of proportion in surveys which suggest levels of gloom not seen since the global financial crisis.

As we looked back on the 10 year anniversary of the GFC last week it was pretty obvious how starkly different things are now.

Above all we have stability and a liquidity that had dried up completely in 2008.

There are risks but - with inflation under control, interest rates still low and stock markets still bullish - it appears the biggest is that we talk ourselves in to a downturn.

Yesterday the Westpac McDermott Miller Consumer Confidence Index showed a significant slump. That is a worry.

It certainly will create a self-fulfilling downward spiral if the public follow business's gloomy lead and stops spending.

Business is entitled to keep fighting policy battles. But it needs to careful how it doesn't shoot itself in the foot.

As New Zealand head's into its 10th consecutive year of economic growth we should be making the most of a rare golden run.

We don't know how long it will be until we face a global stock market crash or some other external shock. Let's not waste the golden weather while it lasts.