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Tuesday, May 21, 2024

Although Jacinda Ardern will be leaving office soon, New Zealand’s economic woes are not going away anytime soon

A racist assault on two mosques claimed the lives of fifty-one individuals. A catastrophic volcanic eruption. The pandemic of coronavirus infection.

In her almost six years in power, New Zealand’s Prime Minister Jacinda Ardern has deftly navigated one unforeseen disaster after another and is poised for reelection in 2020. However, New Zealand’s persistent economic challenges, such as pricey housing and a high cost of living, continued to simmer in the background.

Now, with national elections less than nine months away and days after her unexpected departure, the future of Ms. Ardern’s liberal Labour Party will depend on how voters view how she and her administration dealt with these issues. And with declining economic momentum, increasing interest rates, and inflation eroding family budgets, detractors, especially those in the opposition center-right National Party, will attempt to pin the blame on her.

Chris Hipkins, the current education and police minister, was nominated in a caucus on Saturday to head the party and, by extension, the nation. He is anticipated to bear the brunt of these issues. On Sunday, the nomination is anticipated to be officially supported.

Brad Olsen, the chief economist of the consulting company Infometrics, said that depending on who you ask, the government’s legacy is either utterly terrible or the most golden-awesome thing in history. The reality is somewhere in between these two markers.

Ben Buist, 49, was one of her critics on Thursday when Ms. Ardern revealed her intention to resign. Speaking in the heart of Christchurch, he described his struggles with the country’s cost of the living problem and his attempts to get cheap property.

At the time of Ms. Ardern’s unexpected triumph in 2017, New Zealand’s economy was about in the center of the global pack, according to Brian Easton, an independent economist in the nation. “This is still true now, except that the global economy is doing less well, and so is the New Zealand economy,” he added.

The economy is modest, open, and not very competitive. Its nickname, “shaky isles,” is apt, since it is at the mercy of world events, particularly sensitive to changes in the Chinese economy, and always in danger of natural catastrophe due to its location on many earthquake fault lines.

As Ms. Ardern prepares to become government next month, detractors assert that little economic progress has been made. New Zealand is the twelfth most expensive nation to live in relative to income, with housing being a big worry. Private debt, which includes household debt and student loans, is at around 147% of the gross domestic product, compared to 1547% in the United States and 1333% in Australia.

The rate of child poverty, which Ms. Ardern pledged to make a personal priority, is decreasing but remains higher than in similar countries, particularly among single-parent homes. The wealthiest 10 percent of New Zealanders still possess about half of the country’s household net worth, demonstrating that inequality persists.

Opponents of Ms. Ardern cite an abundance of new challenges and what they perceive to be insufficient answers for existing ones. Economists, however, assert that governments do not always have the solution, particularly regarding inflation and the prospect of a recession.

However, this will provide little solace to people with financial difficulties. The administration of Ms. Ardern has attempted to take credit for record-low unemployment without accepting responsibility for inflation, arguing that, at 7.2%, the unemployment rate is essentially equivalent to that of comparable countries.

As of December, surveys indicated that support for Labour was 33%, while support for the National Party was 38%.

Ms. Ardern campaigned on a promise of “transformational change” that, according to several analysts, she has failed to implement. She has rejected potentially significant policy levers such as a capital gains tax and an increase in the retirement age.

Most of the government’s economic initiatives have originated from Grant Robertson, the country’s deputy prime minister, and finance minister, rather than from Ms. Ardern. Mr. Eaqub said that much of the progress done in reforming the economy has been in unremarkable sectors, whose positive benefits might take years or even decades to materialize.

In terms of housing policy, for instance, Ms. Ardern’s administration has rewritten a long-standing statute to encourage the development of flats and effectively prohibit the zoning of single-family houses in urban areas.

Morgan Godfery, a political commentator and senior professor at the University of Otago in Dunedin, credits Ms. Ardern’s government on the housing front, stating that her administration led a historic effort that resulted in the real construction of extra houses.

Perhaps Ms. Ardern’s biggest economic and non-economic legacy is her government’s swift reaction to the coronavirus epidemic, both in terms of public health response and economic assistance for New Zealand residents and enterprises.

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