NZ Economy Starts Growing Again, But Will It Last?
September 3rd, 2009
Reserve Bank Governor Alan Bollard believes the recovery is beginning. NZ has come through the global financial crisis “reasonably well.” The crisis exposed vulnerabilities, which could have had “harsher consequences.” The National Bank Business Outlook has business confidence levels reaching up to the best in a decade, and its chief economist Cameron Bagrie says there is no doubting a better “feel-good factor” is developing, despite unemployment moving up sharply. Investment and labour market prospects are improving. The economy almost certainly started growing again in the quarter just ended. The annual trade deficit has narrowed to $2.47bn, the smallest deficit since May 2003.
The ability to extract strong export growth to China, with exports up 65% over the past 12 months, is offsetting weakness in other markets. Fonterra’s latest online auction saw the whole-milk powder average price lift 24% to $US2858 a tonne, which followed a 26% rise last month, dispelling some of the gloom which had enveloped the dairy sector. But the high dollar is still a major barrier to the essential re-balancing of the economy. A marked improvement in export performance is critical. Finance Minister Bill English has been calling on bankers and ratings agencies in Tokyo and New York. He’s assuring international lenders the Govt has a realistic plan to control debt, lift growth and re-balance the economy.
Copyright © Trans Tasman Media Ltd
Duncan Cotterill