Good time is on the way

There was an interesting article in the New Zealand Herald earlier this year, being a commentary by Sam Stubbs, the Investment Chief Executive of Tower Group at the time, on the economic outlook for New Zealand. This was one of a number of increasingly positive commentaries focusing on our medium to longer term economic prospects, which we are starting to see come true.
The article, in brief, outlined why Mr Stubbs thinks this country is about to enter a period of economic prosperity that has not been seen since the 1950’s and early 1960’s, as he focuses on four factors which he considers are important in molding this country’s future.

These being –

Water – This is becoming an increasingly precious resource and this country is blessed with an abundance of it. As Mr Stubbs states, the world has globally found all the sources of water that it can and transporting it is difficult. New Zealand’s abundance of water is pivotal to our ability to produce efficient quality food products.

Data – The benefit of the Internet to New Zealand is vast. It has the effect of “relocating this country in the middle of every trade route “. As he points out, look at Sir Peter Jackson, as more and more new industries thrive here, who can communicate instantly via the internet. This is having the effect of removing our perceived isolation from the bulk of our trading partners, which used to be a real barrier for this countries business’s.

Views – Travel has become more common and affordable. Mr Stubbs points out that when he was 10, it cost $2,500, being 4 months’ salary to fly to the UK and now the price is still about the same, but the affordability has gone up. We are already seeing numbers of well heeled entrepreneurs relocating to this part of the world, while continuing to conduct business elsewhere.

Asia – The economic strength of Asia is increasing faster than any other region in the world. This market demands, safe high quality food and the Asian middle class is increasing by 30-40 million per annum. These people will also want to travel and New Zealand is perceived as a safe, racially tolerant society that is one plane ride away for them.

A refreshingly positive commentary which is increasingly being supported.  We received a copy of a US Blog –“Crooks and Liars”, which provided an American perspective on their place in a number of world rankings, both business and social.

As it states – Americans have been indoctrinated for decades that the US is the “ Land of the Free“, that it is the greatest country to live in and the best at just about anything.
The Blog goes on to comment that the latest International index of 123 Countries released by the Fraser Institute, Canada’s leading public policy think-tank and Germany’s Liberales Institute, ranked New Zealand number 1 for offering the highest level of freedom worldwide.

Also the Forbes annual look at the best countries to conduct business in – who was number 1 – New Zealand. It stated that New Zealand can boast a transparent and stable business climate that encourages entrepreneurship.

The Blog goes on to state that this country also tops the world educational rankings on the basis of performance in 3 areas, access to education, quality of education and human capital. In addition we finish ahead of the US in just about every ranking and it wasn’t that long ago that New Zealanders tended to view people shifting to the US as going to the land of opportunity.

The local press appear to have taken some positive pills over the past few months as more and more of these articles are getting published. However, if you talk to business people, although generally positive about the economic direction, they say that business is still tough, whether you are an exporter, farmer, or developer.

The activity in Christchurch is starting to show signs of life and the Auckland apartment development market is also gearing up. There are a number of new builds about to start and a number of experienced developers looking to get back into the Auckland market. It will be interesting though to see what form the Auckland City Council Future Urban Plan ends up in and if Len Brown can ram it through, prior to the next Council elections due at the end of this year. We would suggest that he will struggle, as opposition seems to be building, possibly not so much at the intensification of Auckland housing, but more at the lack of any detail around the provision of services and infrastructure to cope with it.