Last week Bernard Hickey did an article on the downside of Treasury migration forecasts:
Bernard Hickey: Budget buries migration bomb
Quote:
So the Treasury's upside scenario is that in the next six to nine months net migration will be only 3500 over its central forecast.
But the impact will be massive. Treasury forecasts that private consumption growth will spurt to 5.3 per cent from its main forecast of 4.2 per cent. The extra migration would drive employment up and unemployment down to almost 4 per cent by 2018.
That sounds fantastic, but there's a downside. "With the economy already growing faster than potential, the further boost to domestic demand sees any spare capacity in the economy used up more quickly than in the main forecast," Treasury said.
That is code for inflationary pressure and higher interest rates. It forecasts short-term interest rates would jump by a full one percentage point more than already forecast to almost 6 per cent by early 2016.
That would see floating mortgage rates hit 9 per cent and the current account deficit would jump to 6.8 per cent from 6.3 per cent.
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But yeah Cunliffe should focus on promoting their housing policies, the CGT and extra reserve bank tools rather than this pandering. Migration/housing etc not need be a problem under Labour; only under the economic idiots that can only sell assets, borrow into the stratosphere (thanks Cullen), spend and hope that the market works it all out.