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Summary
- New Zealand’s productivity recorded low as compared to its GDP.
- Economist reveals what the country’s economy really needs right now.
- Housing sector hacks that can get the desired productivity results for New Zealand.
At first glance, New Zealand seems to flourish economically. With the GDP having shown steady growth in the past years, by and large, NZ is considered to be a good country to live and work in. However, a recent study has shed light on the productivity of the country and has brought forth the fact that productivity had not been as it should have been over the years. So much so that since 1996, the productivity rates have only seen an increase of about 1.45 on an average. In the duration between 2008-2018, it dropped further to become a mere 1%.
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As evaluated further, the productivity in terms of per hour is as much as 40% less than that of the top-ranking OECD country. The chairperson for the Productivity Commission, Dr Ganesh Nana, explained how the need of the hour was smart work rather than hard work.
The example of the housing sector
The current housing market is hot in New Zealand despite the initial tug witnessed due to COVID-19. Nana revealed that the practice of reselling pre-existing properties to people was not the most optimal way of utilising the capital. This is also the reason for increased housing prices. On the other hand, if Kiwis invest in new properties, the housing stocks would improve.
He shed light on the importance of productivity, stating that with that came various opportunities and choices. If there is an ideal use of resources in terms of time, raw material and skills, there will be more bandwidth left to deal with extracurriculars.
Dr Nana emphasised the need for frontier firms. In May this year, the Productivity Commission is expected to release a new report on frontier firms, which are described as high-value, high-tech companies, which have an high-export potential.
Discussing the importance of exporting, he said that was essential that New Zealand earned money from different parts of the world. Once one exports more, the trade channel widens to import the things that are not readily available or produced in the best capacities in their own country. Be it certain gadgets or technologies, x-ray machines and so on, it’s essential to earn different currencies so that money can be spent on certain imports.
Especially, considering how COVID-19 has left the world economy in shock, there is a need for countries to build smart strategies to increase productivity in order to help a swift and efficient bounce back to pre-COVID-like conditions.
