In a speech to the Auckland Chamber of Commerce today, English said New Zealand’s current economic outlook is showing positive signs despite ongoing wobbles in the global economy.
For example, Treasury forecasts economic growth of over 3% in 2016 and 2017, exports – other dairy are doing well - and unemployment is down.
“But uncertainty remains around the impact of US interest rate hikes, China’s rebalancing path looks rocky, and risks around European banks are becoming more apparent.
Low inflation is an issue that central banks around the world are grappling with, English said.
“There is a lot of uncertainty about exactly what is keeping inflation so low, and the implications for our economies.
“Markets are reflecting an anxiety that economies with zero or negative interest rates can’t rely on central bank interventions as they have in the past.”
English said New Zealand is in a better position than most because the Reserve Bank still has room to move if it needs to.
This means the Reserve Bank could cut the OCR further if it was warranted.
Overall, continued volatility in global markets could be expected, but the New Zealand longer-term outlook is sound, he said.
English’s speech, which was his first major economic speech of the year, also addressed the government’s thinking on fiscal responsibility, housing supply issues and urban planning.
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