Economic forecasting agency Berl has provided a glimmer of hope on what economists say is a gloomy unemployment outlook, but warns of the risk of negative sentiment from political and industry leaders.
Berl senior economist Ganesh Nana said yesterday the next couple of years would be a true test of leadership.
"Without doubt, the global economy is facing a series of challenges that will not be quickly overcome.
"But here in New Zealand, we risk talking ourselves into a downturn much deeper and longer than is really warranted."
Writing in his monthly forecasts, Dr Nana said Berl had been diligently investigating all the data it could locate relevant to the prospects for employment in New Zealand.
Despite the negative sentiment coming through, Berl could not find the widely-expected black hole in New Zealand employment.
Berl had been saying for more than a year the employment market was easing but that it was resilient and "not falling out of bed".
Dr Nana acknowledged some industries had been driven by the country's monetary policy into a deep restructuring.
The forest and wood industry was one where job losses were inevitable but made tougher and earlier by the sharp drop in global demand.
Similar comments applied to the manufacturing industry.
However, the impact of the negative sentiment could be overcome with some decisive leadership.
"But that requires the apparent tug-of-war between competing political power bases and the consequent indecision at the centre to be quickly settled.
"This would enable the New Zealand leadership to announce, and immediately begin their `shovel-ready' - and we hope `nail gun-ready' - practical package for infrastructure building and construction across all regions and relevant industries."
Berl believed a small number of those projects were ready to go to tender and eagerly awaited their start.
Clearly, the outlook for the government accounts was not pretty.
That reinforced the need for far-sighted leadership rather than slavish adherence to a now wholly discredited text book, he said.
The midst of a recession was not the time for a "balancing the books" exercise.
Growing signs of a cavalier "Razor Gang" approach to culling government spending created a sense of deja vu.
"The risk that the current Government will repeat the mistakes of the early 1990s will not only add to the gloom but also further exacerbate the blow-out in the fiscal deficit."
The one thing the Government should not do was be overly concerned about credit rating downgrades, Dr Nana said.
The credit ratings industry were complicit in the financial crises.
"Put bluntly, the credit rating agencies have blood on their hands.
"They gave positive ratings to the collateralised debt obligations and other instruments that are now sitting as toxic assets on the balance sheets of many financial institutions.
"That officials and commentators here and across the globe continue to value the pronouncement of these agencies defies belief."
Looking ahead, Dr Nana said the primary challenge facing New Zealanders and its businesses was to not get overwhelmed by the gloom being spoken about.
The economic issues facing New Zealand and its businesses remained essentially unchanged.
The current global crisis was very bad but jumping up and down and shouting "the end is nigh" was not very helpful.
The list of resources on which New Zealand should concentrate its efforts should be familiar to those who had studied business and economics, he said.
It began with people, skills, experience, and networks and added machines, equipment, buildings, land and water, technology, innovation, enterprise and entrepreneurship.
Most of those resources remained unscathed by the financial turmoil, although the last three were vulnerable to things like mood, confidence, sentiment, climate and perceptions of the future.
To maintain the spirit of innovation, enterprise and entrepreneurship New Zealand must be kept open for business, Dr Nana said.
"A seriously large investment programme across all elements of the list of resources would be a good start.
"New Zealand desperately needs to step up the pace to overcome our long-term infrastructure deficit.
"Now would appear to be the ideal time."
