Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Import News: Recession and Imports

Import News from the Importers Institute:
Recession and Imports

The current global recession started as an old-fashioned bank run in the US. Confidence in the liquidity of the finance sector was quickly restored by the injection of gargantuan sums of taxpayers' money, coupled with government guarantees. The incipient run was stopped in its tracks and, other things being equal, the speculative housing and commodity bubbles that were built during the cheap credit boom would have burst, as all speculative bubbles invariably do.

Unfortunately, left-wing politicians in the US, Australia and the UK saw this as too good an opportunity to miss. Here was an excellent crisis proving that the intellectual bankruptcy of their collectivist worldview was not buried in the rubble of the Berlin Wall in 1989, after all. No, we cannot just allow the markets to do what they do and allow the speculative bubbles to burst. Instead, we will regulate, regulate and regulate even more and then we will borrow a few trillion dollars from our children and grandchildren to 'stimulate' the economy. Those who advocate strangulation by red tape, quickly followed by stimulation with other people's money, do so with a straight face.

In New Zealand, we are fortunate in that the politicians currently in power appear to be marginally saner. Besides, we just do not have trillions to waste. All we can do is to hunker down and wait until it all blows over. There was a glimmer of hope when the Swine Flu briefly replaced the Global Financial Crisis as the panic du jour, but that scare fizzled out. Soon, we may have to go back to global warming alarmism, unless some other apocalyptic certainty takes its place.

Importers are among the first to feel the effects of recessions. This one, however, is a little different from those that we have experienced in the last two or three decades. If you are importing goods that rely on discretionary spending, you are probably taking a big hit right now, but if you import everyday items that people need, you would hardly have felt a ripple.

Because the current recession is largely driven by media sensationalism aggravated by political opportunism, people react in different ways. They defer purchases that are easy to defer, for example instead of changing their cars at the end of three years, they keep them running for another year or two. That is why the car business in New Zealand is in meltdown, along with its support services, like shipping and ports. On the other hand, The Warehouse discount retail chain has just reported an increase of 1% on sales (Red Sheds, same store sales) for the most recent quarter, compared to last year.

Importers of everyday items, like non-luxury clothing, footwear and food are reporting unchanged sales or small drops at the worst. If your washing machine breaks down, you will probably buy a replacement, but that big plasma screen that you have been thinking about will probably have to wait a while longer, especially as you can no longer get a cheap loan on the rising value of your house.

Importers are reacting to the current climate with caution. An increasing number of them are moving their own warehousing and distribution functions to third-party logistics operators, who can usually provide a better level of service at a fraction of the cost, if done properly. They are also attempting to reduce their level of debt, to protect themselves against the outrageous behaviour of our bankers, who have simply failed to pass on interest rate reductions to their business clients while enjoying a government guarantee on their deposits.


ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 



Climate Leaders Coalition: Launches New Statement Of Ambition, Appoints New CEO Convenor

The Climate Leaders Coalition is tonight officially launching a new Statement of Ambition to accelerate business action on climate change... More>>


Retail: New Law Paves Way For Greater Supermarket Competition

Legislation that bans major supermarkets from blocking their competitors’ access to land to set up new stores paves the way for greater competition in the sector, Minister of Commerce and Consumer Affairs Dr David Clark said... More>>



International Business Forum: NZ EU FTA Coming Down To The Wire – Hold The Line

As negotiations accelerate to conclude an ambitious free trade agreement between New Zealand and the European Union, the NZ International Business Forum (NZIBF), representing a cross section of major exporters... More>>


MYOB: New Data Shows Increase In SMEs Experiencing Stress And Anxiety

The lingering impacts of the COVID-19 pandemic have led to a surge in the number of local SME owners and operators experiencing stress and anxiety, according to new research from business management platform, MYOB... More>>



Carbonz: Cashing In On Carbon: The New Marketplace Helping Native Forest To Thrive

The country’s first voluntary carbon credit marketplace, Carbonz, is here to restore native biodiversity and help Aotearoa reach its carbon zero goals by selling the first carbon credits exclusively from native forest... More>>
Entrust District: Dividend Will Be Welcomed After Another Tough Year
We’ve all heard of the saying; “if it sounds too good to be true, it probably is” but for Aucklanders within the Entrust District, getting their share of Entrust’s 2022 annual dividend payment really is as good as it sounds... More>>