New Zealand
18/11/11
Headline Story: Business confidence slumps in October and November
A Bank of New Zealand survey has found that 2% (net) now expect the economy to be worse in a
year’s time. Last month, 7% (net) were expecting an improvement this time next year and 36% (net)
were optimistic about the future. Despite this recent slump, confidence remains about the six year
average of -6%. The Bank believes that such a small decrease shows that New Zealand firms do not
feel exposed to the effects of the Eurozone debt crisis and perhaps indicated a continuation of the
positive national mood brought about by the country’s rugby World Cup success. Confidence does,
however, vary by industry. The mood in agriculture and horticulture is generally positive. But
tourism, property, retail and manufacturing are all struggling.
http://www.stuff.co.nz/business/money/5926130/Business-confidence-turns-tail
http://www.reuters.com
Key Data:
GDP figure $27,217,10
GDP Growth 1.5% growth in Q2 2011
Unemployment 6.6 (Q3 2011)
Inflation 4.6 (Q3 2011)
Interest Rate 2.71 (90-day rate, weekly average 11-11-11)
Exchange Rate ($) 0.7879 (Average for Oct 2011)
10 Year Bond Yield 4.35
Imports See below for TPP stories.
http://www.tradingeconomics.com
Contextual Data:
Business Confidence +13% (net)
Manufacturing as % exports 22.6% (2010)
Manufacturing PMI 46.5 (Oct 2011
http://www.tradingeconomics.com
http://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=10761914
http://www.businessnz.org.nz/file/2185/PMI%20Main%20Release.pdf
Stories behind the figures:
WTO fatigue fuels Asia-Pacific trade deal: NZ minister: The Trans-Pacific Partnership is
gathering momentum as countries become frustrated with the WTO, New Zealand’s Trade
Minister, Tim Groser, says. The US, Australia, Chile, Peru, Singapore, Thailand, Malaysia,
Brunei and Vietnam are already taking part in talks aimed at securing a new trade pact.
Japan, Canada and Mexico have recently expressed an interest in joining the nascent
Partnership, which is seen as a potential free-trade agreement between all 21 members of
the Asia Pacific Economic Cooperation Forum.
http://www.reuters.com/article/2011/11/14/us-apec-tpp-idUSTRE7AD0DK20111114
Japan’s TPP plans ‘threat nz exports’: Japan’s presence in a Trans-Pacific Partnership may
hit New Zealand’s exports, says a leading New Zealand economist. The Japanese government
has pledged to protect its farmers against cheaper agricultural imports, says Council of Trade
Unions economist, Bill Rosenberg. Many of those competitive agricultural imports would
come from New Zealand. The US could well follow Japan’s lead and increase protection for
its farmers, making life hard for New Zealand’s agricultural exporters. Even if Japan does not
restrict agricultural imports, the ability of New Zealand to expand production without
causing to serious environmental degradation is questionable, claimed Mr Rosenberg.
http://www.3news.co.nz/Japans-TPP-plans-threat-to-NZ-
exports/tabid/421/articleID/232528/Default.aspx
Sheep & beef industry will benefit from trade liberalization: New Zealand’s Meat Industry
Association sees Japanese participation in a Trans-Pacific Partnership as a positive
development. Japan is the second biggest market for New Zealand’s beef and lamb
industries, worth NZ$209m. However, Japan currently imposed import tariffs of 38.5% on
beef imports from New Zealand (rising to 50% when certain volumes are reached). The TPP
agreement has the potential to deliver significant benefits to the country’s beef and lamb
farming industries, says the Meat Industry Association, which provides background
information and analyses to New Zealand’s TPP negotiators.
http://www.scoop.co.nz/stories/BU1111/S00507/sheep-beef-industry-will-benefit-from-
trade-liberalisation.htm
Bollard warns of economic risks to NZ: The risk to New Zealand’s financial system has
increased in the past two months, says Alan Bollard, Governor of the Reserve Bank of New
Zealand. The Eurozone crisis has made it harder to New Zealand’s banks to access offshore
debt, he said. At home, businesses and consumers are coping with their debt, which is
improving the country’s external balance, but rising public sector debt is countering this
positive move. But the Governor claimed that the banking system was more able to cope
now than in 2008.
http://www.mortgagerates.co.nz/article/976498753/bollard-warns-of-economic-risks-to-
nz.html
Transport plans may see Auckland Council’s credit rating cut: Auckland City Council’s credit
rating may be cut by Standard and Poor’s following the announcement of public spending
increases. The city’s AA rating has a one-in-two chance of being downgraded, according to
the ratings agency, after placing the city of CreditWatch negative. The spending plans will
increase spending to 170% operating revenue in 2013, rising to 200% in 2015.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10766018