The World Trade Organisation has warned that international trade will grow at a slower rate than before the pandemic hit. COVID-19 restrictions on mobility, disruptions to supply chains and the continued rise in protectionism have all severely tested global trade. Rebuilding trade and international connectedness will be key to a strong and inclusive economic recovery.

For New Zealand boosting trade flow is particularly important as even prior to the pandemic, our relative export performance had been in decline since 2000. Small countries tend to export — and import — more than bigger countries that have larger domestic markets. …

It is very difficult to sustainably grow GDP unless the workforce is also growing at a reasonable rate. Labour force growth in OECD countries contributed one-third of the total economic growth between 1960 and 2015. Since then, many countries have entered a labour-scarce environment, with some countries like Korea, Japan, Germany and Italy already shrinking.

Working-age population past its peak

Economic growth in the developed world grew strongly from the end of WWII to the 1980s, fuelled by an increasing working-age population. Since then, the working-age population has been declining in many advanced nations.

The trend is expected to accelerate as the baby boomers reach…

COVID-19 is only the latest of many epidemics and pandemics to have afflicted the world throughout history. Each pandemic is unique in terms of the nature of the disease, the human response and its historical context. However, there is a lot to be learned from past pandemics, which can provide insights into how the economy may change as a result of COVID-19. So, what are some of the themes that have emerged after past pandemics?

Household savings increase

Household savings tend to increase during a pandemic as people deal with uncertainty by saving as much money as possible. According to an article in…

Prices are rising quickly across much of the developed world with inflation in OECD countries increasing at the highest rate since 2008. In the US, core consumer inflation has surged at a pace not seen since 1992. Central Banks have so far maintained the inflationary pressures are temporary and will abate on their own, although US Fed officials acknowledged on Wednesday that price rises may last longer than they expected.

There are growing concerns that Central Banks and policymakers have misjudged the resilience of the inflationary pressures and we may be in for a period of sustained inflation not seen…

The Economist called it “the West’s biggest economic-policy mistake” undermining economic growth and the public’s faith in fairness and capitalism. The mistake the Economist is referring to is the misguided policies promoting home ownership which created the developed world’s most serious economic failure. At the root of this failure is the application of planning rules that have restricted housing supply, particularly close to major cities. This has led to soaring rents and house prices in the cities, hindering workers from moving to areas where the most plentiful and productive jobs are located, and ultimately slowing GDP growth.

Lost wages and productivity

The real costs…

By Professor Christoph Schumacher

In a speech delivered just before yesterday’s budget, Finance Minister Grant Robertson acknowledged that the New Zealand economy had its problems, even before COVID-19 hit our shores. Housing affordability, climate change, child well-being and productivity issues were enormous issues the country needed to face up to.

The announcements in the 2021 budget won’t have given many business owners confidence that from their perspective things will be changing any time soon. In fact, they may well be in for more of the same, only with higher levels of debt and ongoing shortages of skilled staff.

The budget’s…

While many advanced countries have suffered from falling productivity since the Global Financial Crisis, New Zealand’s productivity performance has been lacklustre since the mid-1990s. Our productivity growth since 1996 has been a paltry 1.4 percent and our output per hour worked is 40 percent below the top half of OECD countries.

This is important since a country’s ability to improve its standard of living in the long term depends almost entirely on its ability to raise its output per worker. …

The rapid development of COVID-19 vaccines has offered hope that we will one day soon see countries returning to a semblance of normality. However there is no doubt COVID-19 has been devastating for the global economy. Global GDP declined the most in 2020 since the Great Depression with the loss of 8.8 percent of global working hours equivalent to 255 million full-time jobs.

A faster vaccine rollout internationally is expected to boost world GDP by 2.8 percent according to the latest KPMG Economic Outlook. On the other hand, a global delay in the rollout of vaccinations until the end of…