Inside Economics: The best news of the week might be the weather

Résumé détaillé

ANALYSIS: Liam Dann takes a deeper dive into the week's economic news.

The best thing to happen to the economy in the last week wasn’t the election. It was the weather.

It’s been raining a lot, and the timing couldn’t be better for our farmers (or protein producers – as we might call them these days).

New Zealand is still very much an agricultural economy and, as such, its gross domestic product (GDP) growth is at the mercy of the weather.

We’re heading into an El Niño summer, which typically means drier, windier weather – particularly for the east of the country.

Last month, ANZ economist Matt Dilly warned of a “high probability of drought”.

It’s almost needless to say that would be very bad news for the economy.

I think we can add it to the list of things that might stop our economy’s recovery before it gets fully established.

Let’s face it, all the strength in the economy is being driven by the buoyant rural sector benefiting from a global protein boom that has boosted demand and prices.

In 2013 – the most recent and well-recorded major drought – Treasury estimated that the economic blow-out took 0.7 percentage points off annual growth.

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