About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Wednesday, September 28th, 4:02PM
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
  • Acorn Income Fund
    19 September 2016
    Finding opportunities in small-cap dividend payers
    Acorn Income Fund (AIF) has produced solid long-term total returns (+138% share price and +135% NAV over five years) from its portfolio of UK smaller companies...
  • Canadian General Investments
    19 September 2016
    Broad exposure to Canadian equities
    Canadian General Investments (CGI) is a closed-end investment fund listed on both the TSX and LSE; it is registered as a Canadian investment corporation....
  • Tetragon Financial Group
    12 September 2016
    Global diversified alternative assets portfolio
    Tetragon Financial Group (TFG) is a specialist closed-ended investment company aiming to provide stable returns across economic and various asset class...
  • Ocean Wilsons Holdings
    9 September 2016
    Brazil now a more positive influence
    After a period in which its controlling investment in Wilson Sons (WSON), a seasoned Brazilian maritime services business, was a source of earnings and...
  • Miton Global Opportunities
    7 September 2016
    Seeking real returns with more specialist focus
    Miton Global Opportunities (MIGO) seeks to provide returns in excess of those on cash by exploiting opportunities from pricing inefficiency among under-researched...
  • Martin Currie Global Portfolio Trust
    6 September 2016
    Diversified global exposure with dividend growth
    Martin Currie Global Portfolio Trust (MNP) aims to outperform the total return of the benchmark FTSE World Index by investing in a portfolio of global,...
© 2016 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Heartland Bank 3.00  
Heartland Bank 3.00  
RaboDirect 3.00  
Based on a $50,000 deposit
More Rates »
Cash PIE Rates

Cash Funds

Institution Rate 33% 39%
ANZ 0.50    -    -
ASB Bank 0.65    -    -
ASB Bank 0.80    -    -
ASB Bank 0.85    -    -
ASB Bank 0.90    0.18    -
ASB Bank 0.95    -    -
Heartland Bank 2.60    -    -
Nelson Building Society -    -    -
RaboDirect 1.50    1.55    1.62
SBS Bank 1.80    2.59    2.70
Westpac 0.55    0.57    0.59
Westpac 0.05    0.10    0.11
Westpac 2.75    2.83    2.96

Term Funds

Institution Rate 33% 39%
ANZ Term Fund - 90 days 2.60    3.01    3.14
ANZ Term fund - 12 months 3.25    3.64    3.80
ANZ Term Fund - 120 days 3.00    3.29    3.45
ANZ Term fund - 6 months 3.15    3.48    3.64
ANZ Term Fund - 150 days 3.25    3.39    3.55
ANZ Term Fund - 9 months 3.25    3.53    3.69
ANZ Term Fund - 18 months 3.45    3.64    3.80
ANZ Term Fund - 2 years 3.35    3.69    3.85
ANZ Term Fund - 5 years 3.60    3.85    4.02
ASB Bank Term Fund - 90 days 2.60    2.97    3.10
ASB Bank Term Fund - 6 months 3.20    3.49    3.65
ASB Bank Term Fund - 12 months 3.20    3.70    3.86
ASB Bank Term Fund - 18 months 3.20    3.75    3.92
ASB Bank Term Fund - 2 years 3.25    3.81    3.98
ASB Bank Term Fund - 5 years 3.55    3.97    4.14
ASB Bank Term Fund - 9 months 3.10    3.54    3.70
BNZ Term PIE - 120 days 3.00    -    -
BNZ Term PIE - 150 days 3.00    -    -
BNZ Term PIE - 5 years 3.60    -    -
BNZ Term PIE - 2 years 3.35    -    -
BNZ Term PIE - 18 months 3.30    -    -
BNZ Term PIE - 12 months 3.25    -    -
BNZ Term PIE - 9 months 3.55    -    -
BNZ Term PIE - 6 months 3.15    -    -
BNZ Term PIE - 90 days 2.60    -    -
Co-operative Bank PIE Term Fund - 6 months 3.60    -    -
Heartland Bank Term Deposit PIE - 12 months 3.40    -    -
Heartland Bank Term Deposit PIE - 6 months 3.30    -    -
Heartland Bank Term Deposit PIE - 9 months 3.20    -    -
Heartland Bank Term Deposit PIE - 18 months 3.30    -    -
Heartland Bank Term Deposit PIE - 2 years 3.70    -    -
Heartland Bank Term Deposit PIE - 5 years 3.70    -    -
Kiwibank Term Deposit Fund - 150 days 3.00    3.09    3.22
RaboDirect Term Advantage Fund - 12 months 3.40    3.50    3.65
RaboDirect Term Advantage Fund - 6 months 3.50    3.60    3.76
RaboDirect Term Advantage Fund - 90 days 2.85    2.93    3.06
Westpac Term PIE Fund - 150 days 2.80    3.08    3.22
Westpac Term PIE Fund - 120 days 2.70    3.13    3.27
Westpac Term PIE Fund - 18 months 3.20    3.58    3.75
Westpac Term PIE Fund - 12 months 3.20    3.58    3.75
Westpac Term PIE Fund - 6 months 3.00    3.38    3.53
Westpac Term PIE Fund - 9 months 3.10    3.44    3.60
Westpac Term PIE Fund - 90 days 2.50    2.82    2.95
Westpac Term PIE Fund - 2 years 3.25    3.85    4.02
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com