Will it all come right for the election next year?

The mine drama is over, a true tragedy for a town. Now for the nation’s grim weather forecast. Life and death goes on.

The great southern oscillation is at the extreme that in 2008 made a drought which sliced around 2 per cent off GDP and sent us into recession before other economies. On the numbers so far, this summer might be as bad or worse.

This drives home a reminder: that volume is a big determinant of our export earnings because a large portion of those exports need good weather to grow well. Prices play a big part but, unlike manufactures and services, volume can’t be cranked up to take advantage of good prices if the weather goes bad.

So, just when business confidence has lifted in anticipation of benefiting from the rugby world cup, Canterbury’s reconstruction and Australia’s roaring good times, there is cause for pause.

First, Australia recorded near-zero economic growth in the September quarter and retailers are talking of tough times. There is increasing commentary of a two-speed economy, the rich mining regions and the rest. The stratospheric Australian dollar, driven up by the resources boom, has damaged manufacturing. The non-posh suburbs in the big eastern cities where most Australians live are not doing so well. Unemployment is up a bit.

It’s all relative (in more ways than one). Australian wages and salaries, even in the slow parts, are still a long way above New Zealand’s, which pulls droves of our people westward. But that wage gap helps New Zealand manufacturers and professional service firms sell into Australia, with the added advantage that they are not stuck with Australia’s high currency.

And Australia is still the envy of the rich world — “the Saudia Arabia of minerals”, as one Australian branch boss of a multinational put it. We coattail this lucky Australia. And own commodities are booming, even if not at Australia’s Himalayan heights.

So, disasters and the weather aside, New Zealand’s economic outlook is not grim, even if it is also not a rosy haze.

But there are caveats.

China is the big driver of the resources boom and in China fast growth has generated inflationary pressures. It has had to touch the brake a number of times recently. As it cools, commodity prices might come off their highs. If China cools too much, that will hurt us directly and via Australia.

Basic global food prices have risen to near the levels in 2008 which triggered riots and crisis measures by governments in developing countries. That could slow economic growth in our growth markets.

And Europe and the United States, the great economic growth engines of the past half-millennium, have got carburettor trouble or worse.

Their trouble is ours, writ large: national and household balance sheets way out of kilter.

In the United States house prices are still falling, unemployment is stuck near 10 per cent, the federal budget deficit is 11 per cent of GDP (to which add state and city budget deficits) and the central bank is printing money like a broke seventeenth-century monarch.

Getting government and household finances back into balance and deleveraging the high debt burden will take maybe a decade or more.

In Europe nobody really knows what comes next: Greece bailed out and missing targets: Ireland bailed out — or maybe not fully yet: Portugal and Spain in deep trouble with lenders who are now eyeing Italy. Can the strong core European governments stump up enough credit to satisfy the financial wolves?

And that still leaves the debt deleveraging to come. Britain, for example, is slashing government spending in a manner that makes Bill English a pussycat. Even in Europe’s strong economies the word is austerity.

The big danger for New Zealand is another massively disruptive international financial shock. Even though we are plugged increasingly into east Asia and even assuming east Asia keeps going along nicely, we need funds from abroad for public services and private sector activity. Another big shock could cut off those funds.

Our problem is that our national and household balance sheets are in bad order: a huge net debt to the world, now being added to rapidly by the government; and a still huge household debt, comparable with Iceland’s and Ireland’s. When English has talked recently of a lift in savings, he actually means a reduction of debt.

It took us about a dozen years to get into this state. It could take us the same time to get out and we are only two years in.

That is the backdrop to English’s half-yearly economic and fiscal update next Tuesday. Because of Asia and Australia, it is not a sombre picture. But it is a sober one.

Is that good or bad for a government up for re-election in 11 months? Will dry weather and other economic factors take the fizz out of the world cup and will voters dump on English and John Key for that?

Or will that give English the opportunity to play dour Southlander to an electorate made receptive by world turmoil to a message of caution and constraint?