Budget To Blow Away Economic Uncertainty
May 10th, 2010
AXA chief economist Bevan Graham says “we could look back on this year as the dawning of new age of prosperity, if the risks can be as successfully managed as the financial crisis was.” Govt strategists in the Beehive are not quite as bullish, but they reckon the Budget will reduce a lot of the uncertainty prevailing at present. Revenue Minister Peter Dunne has confirmed there will be lower tax rates “across the board.” Finance Minister Bill English talked this week of closing tax loopholes which allow around 10,000 households reporting investment losses on property and claiming Working for Families credits.
On the economic front, December quarter GDP is slightly stronger than expected, but the March quarter could be slower. Housing and private consumption are still going sideways. The AUD and US dollar exchange rates have moved in favour of exporters, and commodity prices are stronger than forecast. The surprise has been the demand for logs, which is said to be “enormous,” with prices climbing steadily from last year’s trough. The country’s current account deficit, which was peaking around 9% of GDP, has been cut back significantly to 2.9% of GDP. Another positive trend is the steadily falling number on the dole.
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Duncan Cotterill