Growing Concern At Rising Dollar Impact On Exports
Growing Concern At Rising Dollar Impact On Export Drive, Jobs, Communities….
Serious concern is starting to emerge that the rising value of the dollar is dissuading businesses from making the effort to get into exporting.
Michael Barnett, chief executive of the Auckland Chamber of Commerce, said he was getting increasing reports from members across the region that a New Zealand dollar trading at US$0.60 cents and above is making it extremely difficult for exporters to achieve a profitable return.
The level of concern varies between different groups of businesses:
Commodity exporters with good forward cover which is starting to run out;
Exporters who cover themselves with some importing, but who are reporting the rising dollar is starting to seriously chip away at the bottom line;
Seasonal exporters in areas like fresh fruit, cut flowers and processed foods who traditionally rely on tight margins and don’t have any forward exchange risk cover;
New exporters, for example in advanced horticulture products, who have invested heavily up front in marketing to establish themselves internationally but are now facing making little or no money from exporting to pay off bank loans or consolidate their new market.
“When these varying expressions of concern are put together, there is a strong message emerging for a Government and country whose wealth creation depends on exporting,” said Mr Barnett. For some time, the Chamber has advocated Government set a long-term strategy to double productivity and grow exports volumes over the next decade.
“However, with little sign that Government has a serious campaign to lift productivity, my prognosis is to watch out for a sharply shrinking economy and confidence in the New Year starting with job lay offs and reduced earnings especially by small- and middle-sized businesses in provincial centres,” warns Mr Barnett.
He pointed out that the Chamber of Commerce has a membership base of more than 10,000 businesses in the top half of the North Island.
“In the past, their collective message has proved to be correct. Despite my strong preference to be a deliverer of optimistic messages, I cannot hide from the facts of a growing sense of unease emerging from the heartland of our business community,” concluded Mr Barnett.