Welcome to the September 4 2008 editions of the BNZ Weekly Overview and Offshore Overview.
This week we are once again running our monthly survey of Weekly Overview readers. If time permits please click on the URL below and let us know whether you think the economy will get better or worse over the coming year. Better yet, tell us how things are looking in your particular industry specifying what that industry is and if possible what region you are located in as many people find that extra piece of information quite valuable (hopefully not your competitors).
We have reached an interesting point in the country's economic cycle. Weakness still abounds but we can see things changing which will eventually help deliver stronger growth down the track, and one or two indicators are improving. The difficulty for us economists is that when we discuss this lessening of weakness some people may think we are talking about immediate strength returning in the economy. That is most definitely not the case.
Businesses are still going through a period of attacking weakness in cash flows by Cutting inventories, laying off some spare staff, delaying some capital expenditure, rationalising product lines, and so on. Consumers are also still facing rising debt servicing costs as those with maturing fixed housing rates roll onto higher rates on average for the rest of this year.
We do not expect to see above average growth in the New Zealand economy until late 2009 at the earliest.
Next Thursday morning we expect the Reserve Bank will cut their cash rate again and it will be interesting to see weight they place upon the recent strong decline in the Kiwi dollar when determining inflation risks over the next couple of years.