A top insurance director warns there's "a looming risk of rising unemployment" due to the new Government exacerbating New Zealand's economic challenges.
The comments from David Meys, the commercial director of Coface New Zealand, come after the Government removed an objective to support maximum sustainable employment from the Reserve Bank of New Zealand's (RBNZ) monetary policy remit.
Meys told Insurance Business Mag, "while 2024 will see rebounding commodity prices and increasing tourism and migrant student numbers, the economic challenges faced by New Zealand are exacerbated by the policy decisions of the new conservative coalition Government".
The RBNZ (Economic Objective) Amendment Bill was passed in Parliament at the end of 2023 and effectively changed the monetary policy committee's remit to no longer include maintaining low unemployment.
The bill was passed despite Treasury officials recommending the Government instead only issued a new remit to the bank's Monetary Policy Committee.
National and ACT both promised to remove support for maximum sustainable employment because they said it distracted from focusing on inflation, which has been beyond the target band for more than two years.
Former finance minister Grant Robertson called the removal "reckless".
"After the borders were closed for two years, New Zealand's COVID hangover continues, with record net migration weighing in against a challenging economic landscape characterised by high costs of borrowing, still high inflation, and a new Government adding uncertainty regarding future policies," Meys told Insurance Business.
He warned that "with monetary policy focussing solely on inflation, and amid record net migration, there is a looming risk of rising unemployment".
