NZ Economy Faces Crisis: Exports and Population Growth Key to Survival

New Zealand's economy is facing significant challenges, according to Keith Woodford. He says exports and population growth will interact to determine the country's future in a resource-constrained environment.

The key focus of political parties ahead of the November election has been on tax, balancing the budget, and funding election lollies, but this misses the big picture, according to Woodford.

Inflation, cost of living, unemployment, and infrastructure needs are all pressing issues that require attention. However, the country's growth rate has slowed significantly in recent years, with per capita GDP increasing by only 0.3% annually since December 2019.

The primary export industries currently make up 82% of New Zealand's merchandise exports, followed by tourism and education services. But Woodford notes that high export prices have not translated to overall economic growth due to factors like a declining exchange rate and increasing debt.

The country has been living beyond its means for decades, with annual deficits in government accounts and the national current account indicating a Ponzi structure. The internal economy has outgrown the export economy, relying on overseas funds to survive amidst inflation.