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Sustaining the economic expansion in New Zealand

Tuesday, 28 July 2015   (0 Comments)
Posted by: Author: Corinne Luu
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Author: Corinne Luu (OECD)

The NZ economy has performed well over the past few years, having achieved relatively strong GDP and employment growth.

However, some constraints to sustaining this momentum beyond the short term are emerging in the fields of skills, housing and urban infrastructure.

Skills shortages have risen most in construction trades and management occupations.

Housing shortages are most severe in Auckland, reflecting supply constraints in the face of population increases. As a result, prices are rising, reducing affordability.

Urban infrastructure, particularly for road transportation, is also strained. In this respect, policy has a role to play in expanding economic capacity by reducing supply-side constraints and fostering productivity growth.

At times New Zealand’s fiscal policy has been expansionary during upturns.

Ensuring that permanent spending or tax cuts are implemented in a sustainable manner would encourage the strong fiscal position that New Zealand needs to meet potentially large macroeconomic shocks and long-run ageing-related costs.

This Working Paper relates to the 2015 OECD Economic Review of New Zealand.

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