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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30/9/11

Ratings downgrades reflect structural problems


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The rating downgrades from Fitch and Standard and Poor’s highlight the need for economic policy changes say the New Zealand Manufacturers and Exporters Association (NZMEA). Policy change to incentivise saving and investment in the tradeable sector are needed rather than asset backed borrowing and consumption.

NZMEA Chief Executive John Walley says, “As the graph below shows the current account deficit is staring to grow again and the credit agencies have demonstrated an increased sensitivity to ever higher foreign debt – hence the downgrades.”

“Higher Government debt due to the earthquake, lower sales from increased global uncertainty and optimistic growth forecasts have the potential to exacerbate the problem.”

“A persistent current account deficit is the result of low local savings and an appetite for asset backed debt driving high offshore borrowing. Add to that an absence of the necessary focus on the needs of the tradable sector in Government policy, and where we are should be no surprise. What really surprises me is that Bill English has commented that he did not see this coming – this problem has existed for decades.”
 



tags: current account deficit, credit rating, external debt

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