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John Key - Source: ONE News -
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Given we've still got rising unemployment and can't rule out another recession, is it really that surprising that John Key chose to go for a late November election?
On the face of it at least, it was a bold move by Key to announce the election date so early .
In doing so he gave up the political advantage of keeping the opposition in the dark about the date.
Goff and his troops now have plenty of time to prepare for the campaign and get their ducks in a row.
The advantage is that Key is seen to be not playing politics with the date (something Helen Clark did do). It also exudes confidence .
But I wonder whether deep down there might also be little bit of nervousness in this decision to go with a late November polling date. Nervousness in particular about the health of our economy.
The New Zealand economy is still floundering.
The much longed-for rebound is not with us, and things might well get worse before they get better, especially if food and petrol prices start to rise as predicted.
This week we learned the jobless rate has gone back to 6.8 percent, while new housing consent data showed activity in the building sector continuing to slump.
Some economists now think it is possible - although not a given - that the December quarter GDP figures out next month will be negative like the previous quarter.
This would mean the economy fell back into recession last year. (A recession is considered to be two negative quarters of growth in a row.)
Can you imagine the field day the opposition would have with that?
A new recession - albeit probably a very shallow one - would not be a recession the government could shirk the blame for, even if some of the reasons for it, like the Euro Zone debt crisis, are global in nature.
But recession or no recession, the reality is that the economy is still going to be very fragile well into the middle of the year.
An election around July or any time prior to the World Cup would therefore be risky for National, especially as Key himself has said that the economy will be the defining issue of the campaign.
By waiting until November, Key allows as much time as possible for the economy to find its feet.
By then, cash coming into the country from strong commodity prices should be flowing more freely from the farms to the cities.
The World Cup too should, by November 26, have had the desired effect of boosting spending and creating a bit of an economic feel-good factor.
On the other hand, there are still some risks in going with a November date.
The Reserve Bank governor could be hiking interest rates again by then.
At the moment the market is tipping September for the first hike.
Rising interest rates in an election campaign is never a great look for the government of the day.
Still, if they are rising, Key will, one assumes, be able to at least say it's because of an improving economy.
However I think we've got a long way to go before we get to a
position where the Reserve Bank can realistically start taking
stimulus out of this economy.
*
Dann hosts Breakfast with Petra Bagust each weekday morning
and writes weekly for tvnz.co.nz.
Read all his
articles
here
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Post new commentPapamoa said on 2011-02-04 @ 16:53 NZDT: Report abusive post
Comments made by the PM recently have me wondering if in fact he would be happy for National to lose the election. It may be that he wants Labour to be left struggling with the economy etc.