A key share market index has topped the 3000-mark the first time since October 2008, agricultural and horticulture exports are “skating through” the recession, net migration is rising fast and could reach 30,000 over the next year, the country’s trade balance is improving. So is the recession in its death throes? It’s too soon to pronounce the last rites. The mood in the country is still generally gloomy and uncertain. But over 10 days of positive trading the share market has added $3.2bn in value. In the next few weeks many companies will be reporting results which will be better than expected (and some which will be worse).

The dairy industry has gone from boom to bust (according to newspaper headlines) but the boom was higher than in the past, and one industry leader says the bust “is lighter than in the past.” So how does the Govt see the economic picture? Finance Minister Bill English detects a bit more optimism, signs of an upturn are welcome. He anticipates an up-tick in GDP. It’s still tough going as the economy re-balances. The classic recovery profile would see a drop in the exchange rate, but foreign exchange markets are lumping in NZ with Aust so exporters are facing high exchange rates when they should be low.

Even if the exchange rate unwinds, the debt situation won’t. It will be a long haul to sharpen up the economy’s competitiveness. Fresh shocks could tighten up international credit markets, and make it difficult for NZ to borrow abroad. Risk preferences have shifted, closing the door to many would-be borrowers. The Finance Minister intends to tour the big investment centres (Tokyo, New York, London) in the next few months to reassure bankers NZ is open for business and is a better bet for their money than many other destinations.

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