New Zealand's economic woes

With all the euphamism that is worthy of the old Soviet "Pravda" there is some acknowledgement of the seriousness of the situation.

Just before the Titanic sinks: "we might just have a problem"

After the Rugby World Cup (and with problems in China) there will be nowhere to hide any more.

Reserve Bank warns of global financial risks

Stuff

3 September, 2011

The Reserve Bank is warning of a "slow grind ahead" with surprises and disappointments that can't always be predicted.

There is a "real risk that global economic activity could slow sharply," Bank governor Alan Bollard says.

The Reserve Bank's annual report shows the central bank reported a net profit of $144 million for the year to June 2011, and paid a dividend of $210 million to the Crown.

Bollard said during a "year of shocks and volatility", the Reserve Bank had focused on the resilience of the economy and financial system, while staying on top of inflationary pressures.

He said the developed world was struggling to cope with the aftermath of the global financial crisis and the very large accumulation of public and private debt in the last decade.

"It is now clear that we have a slow grind ahead, with surprises and disappointments that we cannot necessarily foresee. The Bank has been seeking to increase the resilience of the financial system, which will help reduce its vulnerability to external shocks," he said.

The past year was volatile due to unsteady recovery in the US and ongoing sovereign debt crises in Europe, while the Canterbury earthquakes led to significant disruption, destruction and economic uncertainty.

But domestic activity was stronger than expected, and farm earnings benefited from strong commodity prices, driven by growth in China, East Asia and Australia.

However, future inflation expectations rose as GST tax changes contributed to a hefty rise in headline inflation. A high Kiwi dollar has offset the inflationary impact to some extent.

"Overall, the Bank will need to monitor the situation carefully especially as there is now a real risk that global economic activity could slow sharply," Bollard said.

Export prices take a tumble

Stuff

3 October, 2011

World prices for New Zealand export commodities keep slipping, down for a fourth month in a row, but the sting is being offset by a fall in the Kiwi dollar.

The ANZ commodity price index dipped 1.3 per cent in September and is now down 4 per cent since the peak in May, in world price terms.

While world commodity prices have eased back in recent months, they remain high. In world price terms, commodities are 94 per cent higher than the long-run average.

In New Zealand dollar terms the commodity price index is 44 per cent higher than the long-term benchmark.

Strong commodity prices remain a key pillar of support for the economy, ANZ said.

During September, ten main commodities fell in world price terms, three rose and four were unchanged.

Apples were hardest hit, down 23 per cent, but that is typical for the time of the year as the premium prices for southern hemisphere fruit peters out in northern hemisphere markets, ANZ said.

Kiwifruit was also down 4 per cent.

Butter was down 3 per cent, while skim milk powder eased 2 per cent.

The price of logs, beef, wool and cheese all eased 1 per cent in September.

Seafood prices were up marginally, about half a per cent in the month.

However, the drop in the kiwi during the month meant that in New Zealand dollar terms, the basket of commodities was up slightly, 0.4 per cent in the month. That was the first lift since March.