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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14/12/09

Must we be a straw in the wind?


Print-friendly 0 comment(s) Posted in: In the media

Reserve Bank Governor Dr. Alan Bollard this week stated that he is essentially powerless to stop the rise of the New Zealand dollar. This makes one wonder how other small countries have manged to exercise more control over their exchange rate, rather than being battered by the choices of policy makers elsewhere and carry trade arbitrage. Bollard is indeed powerless under our current monetary policy framework, but this stems from the choices inherent in that framework and it need not be the case.

Singapore is a classic case where the Government have decided that a stable currency is a key forerunner to economic growth and have acted accordingly

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Having decided that the Singaporean export sector is critical to real growth in Singapore their policy alignment has delivered external stability. The impact on the growth of the Singaporean economy has been significant:

 

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One obvious flaw in the ‘do what Singapore does’ argument is that New Zealand does not have the foreign reserves needed to carry out such a policy – neither did Singapore when they started; vision and leadership come first.

There are other policy options, such as a variable compulsory saving scheme, that New Zealand could implement. Also, printing and then selling New Zealand dollars as the United States and the United Kingdom have done is one way to build up reserves.

An overvalued currency and a repeat of the political inaction we saw in the last currency cycle will push any hope of a sustainable recovery further away.
 



tags: singapore, currency, carry trade, gdp

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