All indications are the economy should be "roaring along", but it's being held back by business leaders still "nervous" with Labour in charge, an economist has claimed.
"A lot of the economic indicators we're seeing, residential building consents, are still making all-time highs," Cameron Bagrie told The AM Show on Monday.
"Commodity prices look pretty good, there's still migrants coming into this country so we're getting more bums on seats... interest rates are lower, the Government's spending a hell of a lot of money."
So glass half-full, the New Zealand economy should be roaring along.
But surveys of business owners show they're just not putting in the level of investment required to get annual GDP growth back over 2 percent. It's fallen from 0.7 percent a quarter at the start of the year to 0.5 in the three months to July - right on 2 percent annually.
"We should be ready to go - but there are some bigger-picture issues holding us back," said Bagrie. "The business sector is fretting, they're nervous, and when people get nervous they're not inclined to invest. What we're starting to see at the moment is that's starting to weigh on growth.
"I think we're still in that grumpflation-style zone where firms are nervous, and we're going to be in a sub-2 percent growth world for the next 12 to 24 months."
Business confidence surveys have returned negative outlooks ever since the Labour-NZ First coalition was formed in 2017.
"We tend to ignore business confidence," said Bagrie, who has in the past dismissed it as a "politically biased indicator" that only tracks who's in Government, rather than economic reality.
But "if you look at the important economic indicators - firms' own activity expectations, employment intentions, investment intentions, they're still on the negative side of the ledger" he explained.
"If you roll together consumer confidence and those indicators into a composite survey, what does it show? [Annual] growth south of 2 percent, as opposed to north of 2 percent. So yes, we're seeing a little bit of encouraging stabilisation. "Does it say the New Zealand economy's going to be firming, expanding at a faster pace in 2020? The answer is no."
Last time Labour was in power - Helen Clark's three-term Government between 1999 and 2008 - Bagrie said a similar thing happened.
"The first 12 months were pretty ropey, the business sector was not happy. New Zealand came pretty close to a domestic recession."
The second quarter of 2000 saw quarterly GDP growth hit zero. But in 2001 it leapt to over 1 percent, and pipped over 2 percent in 2003 - still the fastest three months of growth New Zealand has had this century.
"We kicked back up as the charm offensive worked," said Bagrie. "What we've got at the moment is [business and Government] not working together. They're sort of at fisticuffs... we've got to see a little bit of maturity here. We need the economy growing strongly."