New Zealand's recovery from the world financial crisis looks healthy compared with many other countries', but despite its strengths, the economy is unlikely to match Australia's growth rate any time soon, a financial expert says.
The fact that the country produces what people want, such as commodities like dairy products, has insulated the economy from the size of declines seen offshore, Professor David Mayes of the University of Auckland's Business School told TV3's The Nation today.
The economy grew a modest 0.8 percent in the December quarter, but it was an improvement on 0.3 percent growth in the September quarter and 0.2 percent in the June quarter, and the previous five quarters of contraction.
"...compared to what's been happening in some of the other countries around the world, where they've been going backwards by nearly 20 percent in a year, we've been lucky in that sense," Prof Mayes said.
While there was very little the country could do to ward off other financial crises, New Zealand could learn from others' mistakes.
"A lot of people have suffered far more than they needed to, because they believed they were largely immune and it wouldn't happen to them, and it turned out to be wrong."
Prof Mayes, former manager of the Reserve Bank of New Zealand's economics department and an adviser to other central banks, said New Zealand would need to become more closely involved with Australia if it was to match the level of economic growth across the Tasman.
Australia's economy, which escaped recession despite the global financial problems, grew by 0.5 percent in the March quarter compared with 1.1 percent in the quarter before, and had an annual growth rate of 2.7 percent.
"I think if the ideas, if the knowledge economy is being pursued, then we could actually get there, because you've got to ask what is it we're going to be better at than other people are, in order for us to be able to increase at that sort of rate," Prof Mayes said.
"...we've gotta be able to do better than Australia in areas where we have something where there's some possibility for an advantage, and human capital is the most obvious," he said.
The Government set up the 2025 Taskforce to find ways to catch up with Australia's economic performance by 2025.
