By Bernard Hickey
New Zealand has just suffered its biggest corporate collapse since 1989 and its biggest natural disaster since 1931. Both events have the potential to destabilise the economic recovery, but they won't.
There are 10 reasons to be cheerful after two weeks of gloom. They are also an antidote for those who say I am a permanent harbinger of doom.
1. We are lucky to be next to the luckiest country
New Zealand is lucky to have the luckiest country on the planet as its largest trading partner and nearest neighbour. Australia's economy just created another 53,100 jobs in August and it continues to benefit from China's apparently insatiable appetite for raw materials. We have our own lucky attributes. Our water-rich land, fisheries and mineral resources are a real asset married to our stable political and legal systems.
2. We are in the Asian hemisphere
New Zealand also has plenty of its own strong connections with an economy that is set to overtake America and become the world's largest by 2030. China is now our second largest trading partner and wants more of our knowledge, resources and clean, green attributes. There are challenges that come with that demand, but it's better to be wanted than not.
3. Our economy is underwritten by Australian taxpayers
Whisper it quietly when you're next visiting the relatives in Australia, but we are lucky that our banking system is owned by Australian shareholders and backed by its government. The core of any economy is its banking system and it is the element most vulnerable in any crisis. Australia's taxpayers and savers proved they would underwrite our banks in October 2008 when they provided a guarantee and pumped in A$20 billion worth of fresh cash.
4. We are learning our lessons
New Zealanders have pulled their heads in after the excesses of the naughty noughties (2000s) and are saving again. A Treasury paper out this week showed household debt to disposable income is falling and consumers are being a lot more careful through this recovery to repay debt or save more before spending more.
5. The government is reforming our tax system
However slow and limited the reforms are, our government is trying to restructure the economy away from consumption and housing and towards production and exports. The increase in the GST rate, the removal of some of the property tax breaks and the reduction in income taxes from October 1 will start to tilt the economy.
6. The hot money has dried up
The Global Financial Crisis and the introduction by the Reserve Bank of its Core Funding Ratio (CFR) have combined to force our banks to find their funding from local Mums and Dads rather than on 'hot' wholesale money markets overseas. All this is helping to stop our foreign debts growing and keep a lid on the housing market. It has also kept our currency remarkably stable in the last year.
7. Many of our best are staying
Ambitious and talented technology entrepreneurs such as Sam Morgan and Rod Drury remain here in New Zealand, reinvesting their wealth to build great new businesses such as Xero and the Pacific Fibre cable. They will connect us to the global 'computing cloud' and allow services exporters to overcome the tyranny of distance.
8. We are a resourceful, creative and resilient bunch
The earthquake and our reaction since the Global Financial Crisis has been to pull together and to get on with rebuilding with a minimum of social strife and disruption. Not every country has that ability.
9. The rest of the world loves us
Many New Zealanders underestimate how popular and loved we are elsewhere. We're small enough not to be threatening. We seen as innovative, creative, open and friendly. We shouldn't be complacent, but we can grow and trade and collaborate on the strength of that good vibe.
10. Summer is coming.
*This article appeared in the Herald on Sunday.