OECD says New Zealand does well but difficulties remain
In a new survey of New Zealand, the OECD says plenty of challenges remain to put the economy onto a sustainable path.
Wednesday, February 2nd 2022, 7:16AM
by Eric Frykberg
This is despite significant successes by international standards in recovering from the economic impacts of Covid 19.
The report was written after the first two Covid crises but before the current spread of the Omicron variant.
The OECD report says the strength of the economic recovery at the time of writing is indicated by a fall in unemployment levels. This stands at 3.4% but a new number is due out tomorrow (Wed)
It adds economic growth is forecast to be a significant number, 4.7%, for calendar year 2021.
This number remains a prediction only at this stage, pending GDP figures for December which are due out from Stats NZ in early March.
Overall, the OECD is mildly optimistic, but notes there are several problems to be addressed.
These include dealing with inflation, house prices, and both household and Government levels of debt.
The OECD recommends that fiscal policy be adjusted in the near term to help stabilise the economy. This would include lowering the cost of pensions to the economy.
This would be done by linking the age of pension eligibility to changing life expectancy.
It also called for an increase in productivity, particularly by using digital technologies better, and notes New Zealand's productivity has lagged other developed countries for years.
The report notes that affordability for first homebuyers is at low levels and it supports moves to limit house price growth with changes such as the still-pending Debt to Income (DTI) ratio limits.
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