Wednesday 20 November 2013

We're doing pretty well, according to the OECD

The OECD's just released its latest Economic Outlook, which you can read online for free here.

We've scrubbed up pretty well. If you like the numbers, here they are (courtesy of the blogger's invaluable friend, the Windows Snipping Tool). Personally I think their unemployment rate forecasts are a bit too cautious, but quibbles aside we're looking at a couple of good years ahead.

There's not a lot of advice for us, either (not that these Outlook updates tend to carry a lot for the smaller OECD economies). Keep up the good work on getting the fiscal accounts in order, monetary tightening should begin soon (we know, every forecaster and his dog has the Reserve Bank raising the cash rate in the first half of next year), and don't let house prices get any further out of hand (we know that, too).

Especially (as you can see if you navigate to Table A1a on p70 of the online document - it's too big to reproduce in full here), which shows that we are one of the four countries with the largest increase in real house prices since the start of 2000. In fact, by a small margin we've got the highest increase (+87.6%), just ahead of Canada (+86.5%), Norway (+85.7%) and Australia (+79.4%).

The other thing that's a bit disquieting from Table A1a is that we've also had the third largest rise in relative unit labour costs over the same period (again our comrades on this one are Norway, Australia and Canada). I'm sure that most if not all of the deterioration in relative competitiveness is down to a higher exchange rate, and isn't down to runaway domestic costs (our latest labour costs index, for example, showed only a modest increase). But in any event exporters are going to find exporting somewhat of a struggle until the Kiwi dollar gets down to more comfortable levels.

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