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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9/6/11

Revise Reserve Bank Act to tackle dollar


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The Reserve Bank Act’s objectives must be changed to include tradable sector growth say the New Zealand Manufacturers and Exporters Association (NZMEA). Inflation targeting might have worked at the headline level but only at the expense of the tradable sector; domestic inflation has tracked well above the target band. New Zealand must follow most other developed nations and look to implement alternatives.

NZMEA Chief Executive John Walley says, “The Reserve Bank can claim that under the Reserve Bank Act objectives it’s doing a good job.”

“A quick look at the economy clearly shows this is not the case. Growth coming out of the recession has been weak despite record terms of trade and strength in two of our major trading partners, Australia and China. The high dollar is made worse by interest rate differentials between New Zealand and those in Europe and the United States.”

“There are a number of actions the Reserve Bank could take, particularly through capital controls, to strengthen the traded economy and provide faster GDP and job growth,” says Mr Walley. “While the only target remains inflation these initiatives are not considered.”

“John Key mentioned yesterday that regular currency intervention was unlikely to change the direction of the exchange rate. This is debatable but in any event other options are available and necessary.”

“Other countries are taking action to lower their exchange rates, whether through quantitative easing in the United States and the United Kingdom, capital controls in Canada and Brazil, direct currency management in China and Singapore, or regulatory prudential mechanisms in Turkey and elsewhere. We must also act to protect our tradable sector; a change to the Reserve Bank Act would be a good start in this process.”
 



tags: reserve bank, capital controls, exchange rate

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