This week’s turmoil on world markets after the bombing of Iran’s nuclear facilities is a clear and present danger to National’s pitch to voters for its re-election next year, either outright or as governing coalition leader.

That it saw before the bombing a voter-satisfying political and economic path to success was evident in a mid-June note to selected voters from Finance Minister Nicola Willis.

She said the economy continued to strengthen with 0.8 percent growth in the last quarter of the year. With inflation at 2.5 percent and the official cash rate down from 5.5 to 3.25 percent, she referred to new opportunities arising for first-home buyers and current homeowners.

“More than half of all mortgages are either floating or due to be re-fixed within the next six months, offering real savings for homeowners,” she said. ” Those with mortgages of $500,000 over 25 years will be about $320 better off a fortnight if their mortgage falls by 2.5 percent in line with the official cash rate reductions.”

Her projections: “Growth is expected to average 2.7 percent; wages are growing faster than inflation and 240,000 more jobs are expected over the next four years.”

New Zealand, she says, is turning a corner.

The finance minister is saying in effect that in her view the public opinion polls that show National behind Labour for ability to manage the economy are wrong and that by election time next year there will be plenty of evidence to back up her opinion.

If households spend mortgage savings and retailers see increased consumer spending, National’s negative polling results might diminish. Support evidence for Willis’s position comes in figures from Stats New Zealand. Nine of 16 industry groups measured showed growth in the quarter. Significantly, it was the long-term, wealth-creating manufacturing and equipment sector that led the way. Departmental spokespeople attributed this to higher investment and exports – both government goals.

But the uncertainties that enveloped global markets and international relations after the US strikes on Iran underlined the potential negatives that might impact Willis’s forward scenario. These include a prolonged period of high oil prices arising from the Mid-east problems that will spark inflationary trends across a wide spectrum of both industry and consumer goods. A second is the erratic and unpredictable decision making in the White House.

As a backstop to events conspiring to spoil its forward election winning plans, National will up its game in local politicking. An example was the decision to reverse the unpopular NZTA move to switch from intersection to roundabout on the planned Ōtaki-Levin motorway. Ōtaki MP Tim Costley deserves a pat on the back for strong representations to secure the extra funding required.

Being prepared to act when local views are clearly set against a course of action in their area is a characteristic of NZ First. National will need to match its coalition partner in that area if Willis is to see the stars align for her team in 2026 without the benefit of a significant easing in cost-of-living indices.

Within the Labour Party, leader Chris Hipkins and his finance spokesperson, Barbara Edmonds, face a major conundrum if they are to benefit from negatives impacting on National’s plan. It is how to balance public opposition against tax increases, as shown in opinion polls, against demands of the activist left.

 Many of the Labour faithful want new taxes from among a group of proposals that include wealth, capital gains and inheritance imposts – enthusiastically supported by the Greens. Hipkins ruled them out before the last election and remains wary of including them in policy positions. He will keep getting admonished from his left side that he must be bold and go for them in one form or another.

The problem his party has might be compared in reverse to that of Donald Trump and the US Republican Party. Millions of American voters reportedly like Trump’s policies. They do not like how he is implementing them. In Labour’s case they do not like a policy of tax increases but they like Hipkins.

The advantage for Willis and her party is that they know lower taxes are a vote winner. The downside for Treasury is making up the lost income. Economic growth addresses the need of both party and administrators.

Economists are divided in their predictions of future growth. But there seems close to a consensus that unless there is a major inflation burst overseas, New Zealand interest rates will stay down and possibly even go down a little more. A reversal of the current downward trend as a result of this week’s events would be unwelcome news to all parties sharing the Beehive office suites.

• Bruce has been an economics and business editor, and a foreign correspondent in Washington, London and Hong Kong.

Finance Minister Nicola Willis says the country is turning a corner.