About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Friday, May 29th, 5:56PM
rss
Investment News

NZ economy out of kilter

The picture of a New Zealand economy out of kilter with the rest of the world grew sharper with the release of the Reserve Bank’s latest monetary policy statement last week.

Monday, August 20th 2001, 2:28AM

by Rob Hosking

FONT FACE="Geneva,Arial">

The picture of a New Zealand economy out of kilter with the rest of the world grew sharper with the release of the Reserve Bank’s latest monetary policy statement last week.

Reserve Bank governor Don Brash left the official cash rate unchanged at 5.75%, as most bank economists anticipated. -.

The difference is we are doing relatively well, economically, while the growth forecasts of 14 of New Zealand’s trading partners have been downgraded in recent months.

"At this stage only Australia, among our major trading partners, appears to be relatively immune to the international slowdown," Dr Brash says.

"If the international environment were to turn out substantially weaker than our projections have allowed, there seems little doubt that the disinflationary pressures on New Zealand coming from overseas would intensify."

Onshore though it is a more upbeat story. although the growth the bank is seeing remains potential at this stage.

Firstly, there is the low dollar feeding through the country’s exporters and into the rest of the economy. This flow has been a bit more economically "sticky" than in previous years, but the bank remains reasonably certain that it will reach the domestic economy. Thus far, though, exporters – especially farmers - have tended to use their extra income to pay off debt.

The bank points to business opinion surveys which show firms are more upbeat about prospects for their own business and, generally, have a more expansionist attitude to investment. This upbeat mood is strongest in the more predominantly provincial areas suggesting this mood is largely an exporter/farmer generated feeling of optimism.

On top of this New Zealand is experiencing its tightest labour market since 1988. Job advertisements are high, unemployment is low and firms reporting difficulties in hiring skilled and unskilled labour.

Dr Brash however rejected calls from the business lobby groups and others to lower the interest rate.

"The business community would always like to see lower interest rates, he said.

Dr Brash also rejected a call from WestpacTrust Bank chief economist Adrian Orr to bring the New Zealand official cash rate in line with Australia’s.

Orr was, until a year ago, the Reserve Bank’s chief economist and Dr Brash dryly observed that "of course I listen to Mr Orr’s views with great respect."

But there were enough differences between the two economies to warrant a separate approach, he said.

"They have higher unemployment than New Zealand, and it is increasing, whereas ours is going the other way. Secondly they are more exposed to Japan and other Asian countries than we are. Thirdly, what is a neutral interest rate for New Zealand is a little higher than what it would be for Australia – we are a smaller economy, more narrowly-based, and there is a risk premium attached to that."

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

« Portfolio Talk: Carmel FisherKing builds an empire »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend

Good Returns Investment Centre is bought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

Edison Investment Research
  • The Diverse Income Trust
    26 May 2015
    Multi-cap income with small-cap growth prospects
    The Diverse Income Trust (DIVI) differs from other UK Equity Income Trusts though its policy of investing in a wider universe of UK quoted stocks. Managers...
  • Fidelity European Values
    18 May 2015
    Increasing confidence in the earnings outlook
    Fidelity European Values (FEV) is an actively managed closed-end fund with a focus on continental Europe. The manager aims to achieve long-term growth...
  • Martin Currie Pacific Trust
    7 May 2015
    Unconstrained long-term Asian growth strategy
    Martin Currie Pacific Trust (MCP) is an actively-managed fund focused on Asia ex-Japan, differentiated by its aim of achieving returns commensurate with...
  • Henderson Global Trust
    5 May 2015
    Global player seeks out hidden gems
    Henderson Global Trust (HGL) is a long-established investment trust that has undergone a transformation in the past two years, from a 50/50 UK/overseas...
  • Dunedin Enterprise Investment Trust
    1 May 2015
    Mature portfolio raises realisation prospects
    Dunedin Enterprise Investment Trust (DNE) is a private equity investment specialist, which is differentiated from peers by its focus on UK lower mid-market...
  • JPMorgan Global Convertibles Income Fund
    1 May 2015
    Total returns from underappreciated asset class
    JPMorgan Global Convertibles Income Fund Limited (JGCI), launched in mid-2013, seeks to provide investors with income (current yield of 4.4%) and long-term...
© 2015 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
RaboDirect 4.30  
Based on a $50,000 deposit
More Rates »
Cash PIE Rates

Cash Funds

Institution Rate 33% 39%
ANZ 2.60    2.67    2.79
ASB Bank 3.15    3.29    3.44
BNZ 3.15    3.44    3.60
Direct Broking Call Account 2.80    2.92    3.05
Heartland Bank 4.00    4.28    4.48
Kiwibank 2.40    2.50    2.61
Kiwibank 3.15    3.29    3.44
Nelson Building Society 3.75    3.90    4.08
RaboDirect 3.30    3.44    3.60
SBS Bank 3.25    3.11    3.28
TSB Bank 3.50    3.63    3.80
Westpac 3.00    3.09    3.22
Westpac 0.10    0.10    0.11
Westpac 4.15    4.27    4.46

Term Funds

Institution Rate 33% 39%
ANZ Term Fund - 90 days 3.00    3.08    3.22
ASB Bank Term Fund - 90 days 3.50    3.08    3.22
ASB Bank Term Fund - 6 months 4.10    3.85    4.02
ASB Bank Term Fund - 12 months 4.30    4.18    4.37
ASB Bank Term Fund - 18 months 4.40    4.28    4.48
ASB Bank Term Fund - 2 years 4.50    4.40    4.59
ASB Bank Term Fund - 5 years 4.75    5.25    5.49
ASB Bank Term Fund - 9 months 4.15    4.18    4.37
BNZ Term PIE - 120 days 3.65    3.58    3.75
BNZ Term PIE - 150 days 3.65    3.38    3.53
BNZ Term PIE - 5 years 4.65    4.88    5.10
BNZ Term PIE - 2 years 4.40    4.60    4.81
BNZ Term PIE - 18 months 4.35    4.55    4.76
BNZ Term PIE - 12 months 4.30    4.18    4.37
BNZ Term PIE - 9 months 4.20    3.97    4.14
BNZ Term PIE - 6 months 4.10    3.97    4.14
BNZ Term PIE - 90 days 3.50    3.08    3.22
Co-operative Bank PIE Term Fund - 6 months 4.00    4.11    4.30
Heartland Bank Term Deposit PIE - 12 months 4.60    4.54    4.74
Kiwibank Term Deposit Fund - 90 days 3.30    3.38    3.53
Kiwibank Term Deposit Fund - 6 months 3.75    3.85    4.02
Kiwibank Term Deposit Fund - 12 months 4.10    4.20    4.41
Kiwibank Term Deposit Fund - 150 days 3.60    3.70    3.86
Kiwibank Term Deposit Fund - 120 days 3.30    3.38    3.53
RaboDirect Term Advantage Fund - 12 months 4.35    4.47    4.67
RaboDirect Term Advantage Fund - 6 months 4.10    4.22    4.41
RaboDirect Term Advantage Fund - 90 days 3.55    3.65    3.81
Westpac Term PIE Fund - 150 days 3.50    3.34    3.49
Westpac Term PIE Fund - 120 days 3.50    3.34    3.49
Westpac Term PIE Fund - 18 months 4.50    4.32    4.51
Westpac Term PIE Fund - 12 months 4.20    3.96    4.14
Westpac Term PIE Fund - 6 months 3.75    3.86    4.03
Westpac Term PIE Fund - 9 months 3.80    3.90    4.08
Westpac Term PIE Fund - 90 days 3.00    3.09    3.22
Westpac Term PIE Fund - 2 years 4.75    4.52    4.72
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com