Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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9/12/10

RBNZ: right message but no action


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The Reserve Bank has lumped much of the responsibility for high interest and exchange rates at the feet of the Government, blaming fiscal deficits for the problem. Lower interest rates and exchange rates will require both fiscal and monetary policy changes say the New Zealand Manufacturers and Exporters Association (NZMEA).

The Reserve Bank Governor Alan Bollard said at the Monetary Policy Statement this morning that, “Sustained strength in the currency is inhibiting the rebalancing of economic activity towards the tradable sector. Accelerated elimination of New Zealand’s fiscal deficit could help improve national savings, thereby easing current pressure on interest rates and the New Zealand dollar, and reducing New Zealand’s dependence on international borrowing.”

NZMEA Chief Executive John Walley says, “Alan Bollard has hit the mark with this statement. Fiscal imbalances are one of the main drivers of our unbalanced economy and it has been disappointing to see the Government reject proposals such as a capital gains or land tax and a higher superannuation age out of hand.”

“However, the Reserve Bank has the option to use existing supply side tools rather than expecting others to act. More can be done through prudential measures such as the Core Funding Ratio and Loan to Value Ratios, which can push back against foreign credit thereby reducing exchange rate pressures.”

“It seems that both the Reserve Bank and the Government are keen to pass the buck on economic imbalances. What the real economy needs is some action not finger pointing.”
 



tags: fiscal deficit, exchange rate, core funding ratio, loan to value ratio

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Please play the ball not the man.