Chinese economy vital for NZ as Europe and U.S. take medicine: Key
by Pattrick Smellie
Aug 15 (BusinessDesk) – The Chinese economy is the most important indicator for the domestic economy now, because of its direct impact on growth in Australia, New Zealand’s largest trading partner, says Prime Minister John Key.
With Europe and the U.S. heading into an extended period of economic slowdown while they “take on board the medicine” required to get their public finances in order, New Zealand could expect slower growth than if those parts of the world were healthy.
“But I will tell you now, the one I worry about is China,” said Key. “That’s what affects Australian and that’s what affects New Zealand. Australia is 100% exposed to China. That’s their market.“We still see a very strong picture there. That’s why you have this big focus on Asia and India.”
Key also offered his former New York financial markets trader’s perspective to last week’s chaos on American and European financial markets, saying trading in August, at the height of U.S. summer holidays, was “like trading on December the 28th” in New Zealand.
Key said he thought current world financial turmoil was very different from the forces unleashed in the 2008 global financial crisis.
“We will see,” he said. “We aren’t immune to the rest of the world, but I genuinely think we are in a lot better shape than a lot of other countries.”
Quizzed on the youth benefit reforms announced at the National Party conference over the weekend, Key said his government would not propose extending the proposal to control teen beneficiaries’ spending by paying rent, power and food in controlled ways to the adult beneficiary population.
Key also mused on the possibility that National could govern alone if it won 48% of the party vote in the November 26 election. In response to reporters’ questions, he volunteered this would likely be sufficient to form a single party government, but he was not ruling out deals with other parties if that happened.