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


Welcome to the August 11 issue of the BNZ Weekly Overview

Welcome to the August 11 issue of the BNZ Weekly Overview

The week has been a tumultuous one with the NZD falling at one point to 79.7 cents – making for a nine cent range over a ten day period – sharemarkets here and overseas tanking, and forecasts for growth being slashed while interest rate rise expectations have been pushed well out. In fact in the US no rate rises are now planned for at least two years according to the Federal Reserve and that factor will tend to keep NZ long term borrowing costs low thus removing a lot of the threat of sharply rising fixed interest rates here.

In fact, given the turmoil, one still has time (once again) to sit floating before moving to a fixed rate if that is what one is planning this cycle. We expect NZ monetary policy will be tightened from December now so thinking about fixing remains a worthwhile thing.

Is this a repeat of late-2008? No. The turmoil is all about downward revisions to growth expectations coming at exactly the same time as the US credit rating cut and yet another round of debt wobbles in Europe. This is not a liquidity crisis involving banks and businesses being unable to source funding. That was the deadly aspect of the 2008 event. But complacency is not warranted because unlike back then there is now essentially no capacity in the major Western economies to react to a worsened growth outlook by either easing fiscal policy, and with interest rates already so low monetary policy effectiveness has hit Japanese levels in the United States and is close to it in the UK and to a lesser extent Europe.

Thankfully in New Zealand we have a number of key factors which will underpin our growth. They include the rebuilding of Christchurch, slow feed-through of higher farm incomes in farm spending, good manufacturing sector growth supported by a low exchange rate against Australia, and catch-up house building likely to kick-off soon in Auckland.

But ultimately the current turmoil is a reminder that world growth for the next few years will be mild and that for ourselves China and wider Asia plus Australia are where we will increasingly derive our export income.

This week at you will find the weekly column plus results of our two monthly surveys.

Best Regards,
Tony Alexander


© Scoop Media

Business Headlines | Sci-Tech Headlines


Civil Contractors: Massive Rebound In Civil Construction Business Confidence

New Zealand’s civil construction industry is riding a massive rebound in post-pandemic business confidence – but this may be undermined by skills shortages, which continue to be the industry’s number one challenge... More>>

Energy: Feeling Our Way Towards Hydrogen - Tina Schirr

Right now hydrogen is getting a lot of attention. Many countries are focusing on producing hydrogen for fuel, or procuring it, or planning for its future use... More>>

Maritime Union: Calls For New Zealand Shipping To Resolve Supply Chain Crisis

The Maritime Union says there needs to be innovative responses to ongoing shipping congestion. Maritime Union of New Zealand National Secretary Craig Harrison says it is essential that New Zealand develops its own shipping capacity... More>>

Housing: New Home Consents Continue To Break Records

A record 44,299 new homes were consented in the year ended June 2021, Stats NZ said today. “The annual number of new homes consented rose again in the June 2021 year, the fourth consecutive month of rises,” construction statistics manager Michael Heslop said... More>>

Real Estate: June Home Transfers Remain High
There were 44,517 home transfers in the June 2021 quarter, the highest June quarter figure since 2016, Stats NZ said today. The number of home transfers was very similar to the March 2021 quarter and was up 18,252 from the June 2020 quarter... More>>

Statistics: Household Saving Falls In The March 2021 Quarter

Saving by New Zealanders in the March 2021 quarter fell to its lowest level in two years after rising sharply in 2020, Stats NZ said today. Increases in household spending outpaced income growth, leading to a decline in household saving from the elevated levels that prevailed throughout 2020... More>>