NZ economy

Export-led recovery not happening - economist

An economist says there is little evidence of an export-led recovery in New Zealand.

Radio NZ,

1 May, 2012

The monthly National Bank Business Confidence survey found optimists outnumbered pessimists, however sentiment in the agriculture sector slumped as commodity prices fell and the New Zealand dollar remained high.

Most optimism was expressed by the retail sector which recorded a 23 month high.

National Bank chief economist Cameron Bagrie suspects that is related to improved sentiment flowing from the housing market into the broader economy.

Strong growth signals are also appearing other "spending-centric" sectors, construction and retailing, and Mr Bagrie says there's a limit to New Zealand's ability to borrow and spend its way to growth.

"If you go back, big picture, three years after we've had a global financial crisis, we've had record high commodity prices, good dairy production in the coming season and New Zealand still has a current account deficit of 4% of GDP."

He says that is an unsustainable position, and while growth in any sector is a good thing, New Zealand's long-term economic future rests with exporting sectors and agriculture and manufacturing both expressed falling confidence

NZ dollar falls on US and Spanish data

The New Zealand dollar fell after business confidence in the US expanded at the slowest pace since 2009, weighing on equities and data showed Spain slipped back into a recession.

TV3,

1 May, 2012

The New Zealand dollar fell to 81.76 US cents at 8am from 82.20 cents at 5pm on Monday. The trade weighted index decreased to 72.42 from 72.77.

The Standard & Poor's 500 Index declined 0.6 percent after the Supply Management-Chicago business barometer fell lower than the most pessimistic forecast in a Bloomberg survey.

That sapped investors' appetite for growth assets including currencies of commodity exporters such as New Zealand.

"The New Zealand dollar has been amongst the weakest performing currencies overnight," said Mike Jones, market strategists at Bank of New Zealand.

"A mild deterioration in risk appetite saw the US dollar and Japanese yen outperform at the expense of the commodity currencies."

In Europe, investors have little reason to believe the debt crisis is improving after Spain's economy contracted 0.3 percent in the first three months of 2012, the same as the last quarter.

The Spanish government has been unable to convince investors it can narrow its budget deficit in an economy grappling with about 25 per cent unemployment.

Ahead of an interest rate cut by Reserve Bank of Australia on Tuesday, the New Zealand dollar fell to 78.44 Australian cents from 78.61 cents on Monday at 5pm.

The kiwi declined to 61.78 euro cents from 62.01 and to 65.27 yen from 65.87 yen