Editorial: Nobel prize economist puts NZ's Covid response in perspective

Editorial

Nobel prize-winning economist Joseph Stiglitz has singled out New Zealand's Covid-19 response as the most successful in the world, arguing it represents the antithesis of America's failure.

As celebrity mentions go, his is unlikely get this country trending on social media.

But the former World Bank chief economist, now Professor at Columbia University, is very much a celebrity in the world of economics.

His endorsement, in an essay published by the International Monetary Fund (IMF) this week, will carry more weight with serious policy makers around the world than the spurious comments of US President Donald Trump.

Last month, Trump singled New Zealand out for our outbreak of community transmission.

"Big surge in New Zealand. It's terrible. We don't want that," he told supporters in a speech on August 17.

The US has now seen 6.2 million cases of Covid-19, with a death toll in excess of 180,000 and still averaging above 1000 per day.

Writing about the economic damage the pandemic is doing to the world, and the rising inequality it will cause, Stiglitz said two countries illustrate the likely lessons that will emerge.

"If the United States represents one extreme, perhaps New Zealand represents the other," he says.

American economist Joseph Stiglitz, who won the Nobel prize in 2001, says NZ's Covid response leads the world. Photo / File

"It's a country in which competent government relied on science and expertise to make decisions, a country where there is a high level of social solidarity — citizens recognise that their behaviour affects others — and trust, including trust in government."

That's a view that's been somewhat lost domestically as we've grappled with the realities of a second outbreak and a new lockdown - overlaid with the inevitable drama and conflict of an election campaign.

But Stiglitz' comments are reminder that, in a world ravaged by plague, New Zealand's response continues to be viewed as an outstanding success.

It has become clear in the past few weeks that this Government and its pandemic response are not perfect.

The Government has rightly faced intense scrutiny of its processes and policy.

But thus far none of this Government's failings can be measured in a rising death toll.

Nor is the country on the brink of economic catastrophe.

Despite the ongoing financial hardship faced by many workers and business people, the outlook for the economy remains strong by international standards.

Economic data continues to surprise on the upside, relative to assumptions made as the pandemic hit in March and April.

Yesterday saw stronger export prices lead our Terms of Trade to a record high.

"The strength of New Zealand's export prices highlight how New Zealand's role as a food exporter will likely provide the NZ economy with some buffer as the global economy is rocked by the Covid-19 pandemic," ASB economists wrote.

"On balance, today's trade data suggest that the decline in Q2 GDP may not be as severe as initially feared."

In the past week there has been data showing the property market holding up better than expected and the NZX-50 stock market index has hit record highs.

New Zealand faces a long road to recovery and much hardship lies ahead. But is good to keep some perspective on how bad things could have been.