Liam Dann: Were living in a land of confusion – get used to it


“It’s a confusing period,” Alan Bollard, told the Apec CEO Summit on Thursday morning.

Bingo. A guy with one of the least confused brains in New Zealand sums up the state of the world in four words.

In fact, the former Reserve Bank Governor and Apec executive director has always struck me as the exact opposite of confused.

The Oxford English Dictionary says the opposites are: “lucid” and “precise”.

I think that describes Bollard’s style pretty well.

There was a lot going on at the virtual summit, which was hosted by New Zealand on Thursday morning.

Chinese President Xi Jinping warned of rising cold war risk.

Superstar lawyer Amal Clooney made an impassioned plea for human rights, we heard from our own Prime Minister, the Australian PM and the President of Peru.

The OCED Secretary General gave us an economic update, Helen Clark talked about the disastrous inequity of vaccine rollouts around the world unnecessarily prolonging the pandemic.

US comedian and talk show host Stephen Colbert even dropped in to do a few jokes about the Kiwi accent.

But for me, the highlight was hearing a lucid and precise thinker like Bollard acknowledging the confusing nature of everything right now.

Contrast that, for example, with the protesters shouting outside parliament last week.

They weren’t confused. They were certain they knew exactly what was going on.

The same seems to be the case for numerous angry tweeters and Facebookers and online commenters.

Ironically, one of the only certainties we have right now is that getting vaccinated will dramatically reduce the odds of Covid-19 killing you.

Of course, Bollard was talking specifically about global economic trends.

Economists were still struggling to understand this recovery, which was “full of contradictions”, Bollard said.

That is very true. There are few economists right now that don’t caveat their commentary with reference to the impossibility of knowing how the pandemic plays out.

Vaccine efficacy aside, there is still a great deal of uncertainty about that.

We are still learning about the virus, the virus is still evolving.

Treatments are progressing rapidly but throw in the wild variability of individual and collective human behaviour and predicting anything further out than a few days ahead gets fraught.

It is a confusing period.

That doesn’t mean the commentary and analysis isn’t valuable. People like Bollard are experts.

The angry and unconfused don’t like experts. They are certain the experts are all wrong.

Personally, I think the many thousands of hours experts dedicate to gaining a deep understanding of specific issues makes their judgement more valuable than mine.

So I listen and read. I digest and then I often recycle into short summaries for this newspaper.

The best experts concede the world is too crazy for certainty, but they still offer meaningful insight for use in our everyday risk assessments.

Bollard did just that on Thursday in a succinct manner which suggests he’s maintaining a well-structured and highly contextualised state of confusion.

He rattled off some of those big economic contradictions in quick time.

The Apec region was experiencing record growth of 10 per cent, yet just a year ago it was in deep recession, he said.

The international trade of goods is booming but trade in services is still stuck in recessionary lows.

Domestic investment is strong but foreign direct investment is at 20-year lows.

Costs are pushing prices up but central banks are looking through the inflation risk.

Wages were going up but productivity is stagnant.

Jobs are being displaced but labour shortages are being reported everywhere.

The world he described is one at the mercy of big opposing forces.

The pandemic restrictions caused supply restraints and inflation that is now crashing into surging recovery demand.

But just to complicate things, demand is getting sporadically walloped by resurgent Covid outbreaks and fresh lockdowns.

We get counter-intuitive data nearly every day.

A survey last week showed New Zealand investor confidence actually rose last quarter.

New data revealed that rates of insolvency – firms shutting up shop and going out of business – is lower now than it was in 2019.

There were 520 court applications filed for liquidation for the period from January to October 2021, compared to 734 for the same period in 2018, 614 in 2019.

PWC’s national leader of restructuring, John Fisk, believes the worst may be yet to come.

What we could be seeing is the results of many struggling firms simply going into hibernation on government support.

That may depend on the strength of the post-lockdown rebound – another area of confusion.

We know that people like to get out and spend up after a lockdown. But the experience last year, and through the start of this year, was in a Covid-free environment.

As BNZ head of research Stephen Toplis pointed out last week, we don’t know if people will be so keen with Covid at large in the community.

It’s probably the biggest uncertainty facing the economy in the next 12 months, he said.

Toplis wrote that on the eve of the Government’s announcement on reopening Auckland retail.

Aucklanders responded by queuing up outside malls to get in at midnight.

Ultimately the biggest question remains: when will pandemic end?

The answer will be confusing because it will be different in different parts of the world.

It will be confusing because the recovery won’t actually wait for the end of the pandemic.

That means we should expect more conflicting economic pressures, more turbulence more contradictory data.

And we should be wary of anyone claiming they offer certainty.

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