Tony Alexander's BNZ Weekly Overview

A Concise Summary

This is the situation. NZ has averaged growth of 2.3% per annum the past decade but only grew 1.5% in the year to June. Our economy has performed poorly and has not grown faster than 3% since early-2006. After growing 0.5% in the 2010 December quarter and 0.8% in the March quarter we only managed 0.1% in the June quarter. Growth has stalled. Looking at partial measures we see there seems to be some growth in business investment, a recovery in housing has tentatively started with little price movement, but household spending growth is mediocre, export receipts are easing, and fiscal policy is tightening. Jobs growth is probably just over 1% p.a. and unemployment has been stuck near 6.5% for two years. Inflation is (artificially GST-boosted) high at 4.6%, the current account deficit is (artificially earthquake reinsurance) low at 3.7% of GDP, and monetary policy is very easy with a 2.5% cash rate.

For more, see: WOOct27.pdf

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