Liam Dann: Ten things for a new government to worry about

In theory the new government - whatever its final form - will inherit a benign New Zealand economy. Despite the social issues highlighted through the campaign, we have relatively strong GDP growth, a budget surplus and interest rates that are safely on hold for the foreseeable future.

But New Zealand's recent economic history suggests the calm bits are the exception rather than norm. We're due for change and the incoming government will need to be prepared for the worst.

Housing slump:

Houses prices have been a hot election issue and everyone has policies to solve the shortage. But what happens if prices keep falling?

We never really got to the bottom of what drove the housing boom. Auckland's market stalling with immigration at record highs is evidence of that. If demand stays slack and new house building continues at pace then we may see the kind of slump that starts to put some people under real financial pressure and spreads out to the wider economy.

Market crash:

There's no specific reason to be pessimistic but we're nine years into a bull market, already one of the longest winning streaks in history.

At best, it seems safe to say we're closer to the end than the beginning of this market cycle. At worst stocks are overvalued and we're due a correction. There are plenty of smart financial industry players watching nervously.

As we approach the 30th anniversary of the 1987 crash it's worth remembering the damage that did to this country. The NZX is a more solid market now but a global crash would be a shock to KiwiSavers who've been watching their accounts grow steadily.

Trade war:

Protectionism is already on the rise and dampening global growth. So far fears of a showdown between the US and China have proved unfounded. But with the volatility of Donald Trump anything is possible.

The question remains: If our hand was forced which side would we choose? Or could we negotiate a neutral path? The next government will need to be sure that New Zealand is at the top of its diplomatic game.

Cyber war:

This one topped the list of worries for business leaders in the latest Mood of the Boardroom survey. A couple of high profile viruses earlier this year seemed to hone the concern.

As the damage a digger did to our national fuel pipeline shows, New Zealand is small and vulnerable to major disruption when one piece of infrastructure breaks down. A major cyber attack hitting government or a large corporate could stall the economy.

Real war:

The big one. It's not like we have any influence over the posturing of North Korea and the US response. Even a localised non-nuclear conflict would shake the global economy. A nuclear conflict doesn't bear thinking about.

Unfortunately the new government needs to. What's the plan if global trade was shut down completely for a months? Or tourism stopped dead? Scary stuff.

Global deflation:

What if we don't see any dramatic shift in the global economy but the long stagnation just goes on and on. Nearly 10 years after the global financial crisis we are still in a world of low interest rates, low productivity and low inflation. That's seen wages stagnate while asset prices soar. The richer have gotten richer.

The smartest economic brains in the world are struggling to find a solution. After all the promises that have been made in the past weeks New Zealand's next government will be expected to lead the way.

Tech disruption:

Are robots coming for your job? Perhaps not in the next three years. But pressure is mounting in important sectors like retailing. Amazon is coming. The government needs to be prepared for possibility of a major corporate failure - just take a look at the Toys R Us collapse in the US.

Technological change is also one of the causes of low wage growth. We need to take a radical look at how we are educating the next generation of workers.

Australia:

The fortune of our nearest neighbour is probably one of the most underrated influences on our economy. A resurgent Australian economy would change the dynamic drastically in this country.

For starters it might see a return to the traditional pattern of Kiwis heading across the ditch. It might also see a increase in investment in this country, more corporate takeover and a bigger hole in our current account.

Commodity Prices:

For better or worse the price of agricultural commodities remains the big driver of New Zealand's prosperity.

Things have been looking pretty good for dairy in the past few months with global demand for milk fats. The wet winter is threatening to curb production volumes which also puts upward pressure on price. But we all know markets are fickle and there is pressure to keep moving our exports up the value chain.

Climate change:

Last but definitely not least is the weather. It's a huge influence on economic growth. Even based on New Zealand's traditional weather patterns we're probably due a recession inducing drought, although lately it's been floods and heavy rain disrupting food production and pushing the price of cucumber and spinach through the roof.

Beyond the policy promises around climate change targets and trading schemes the new government will need to be ready to deal with the economic shock of more regular extreme weather events.