Same old problems dent recovery

Same old problems dent recovery - 5 August

New Zealand’s economic recovery has stalled with new unemployment numbers rising to 6.8 percent in the June quarter. Further bad news is expected with Fonterra likely to downgrade its payout in response to falling milk powder prices and higher exchange rates. These problems will persist pending structural changes to our economy say the New Zealand Manufacturers and Exporters Association (NZMEA); the tradeable sector needs policy attention.

NZMEA Chief Executive John Walley says, “A bit of growth in the economy seemed to have glossed over the persistent problems caused by an unbalanced tax system and ineffective monetary policy. The latest set of results has delivered a reality check.”

“The simple fact is while these underlining problems are ignored by the Government we will continue to see poor productivity growth. This means poor returns to business, low wages and unemployment.”

“We have a tax system that continues to promote investment in assets rather than productive activities that increase our wealth, and a monetary policy system that discourages investment in the tradeable sector. It is no surprise that we have an unbalanced and unproductive economy.”

“Political leadership is needed to turn this around. Tinkering around the edges of economic reform will not provide the step change that is needed.”

ENDS

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