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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Hopeful forecasts prevent much needed OCR cut

Print-friendly 7 comment(s) Posted in: In the media

Overly optimistic forecasts are again behind the decision not to cut the Official Cash Rate (OCR) say the New Zealand Manufacturers and Exporters Association (NZMEA). Continued low growth, and broader economic conditions that prevent any realistic expectations of faster export growth, justify a cut.

NZMEA Chief Executive John Walley says, “It is clear to anyone involved in the export sector that current performance is poor and prospects for future growth are no better. This is largely the result of the Reserve Bank’s high interest rate policies that drive up the exchange rate reducing export returns.”

“The International Monetary Fund (IMF) has stated that a 15 percent drop in the NZ Dollar would be needed to balance our current account in their Country Report on New Zealand – this should be an aim for the Government, Treasury and the Reserve Bank.”

“The overcooked forecasts we see underpinning the actions of the Reserve Bank and Government are a result of a lack of absent connections to the real economy by our institutions. Clearly those building these forecasts are out of touch with our trading reality.”

“We need a cut in the OCR next time around and a clear statement that more will be done in the macroprudential area to take some speculative pressure of the currency and give exporters a chance. Quite why the Reserve Bank stands by as 95 percent home loans reappear in the market again so soon after a housing bubble is beyond me.”

tags: ocr, imf, reserve bank, exchange rate


4 Comment(s)

Bushman - 17 July 2012 at 9:49 AM
Allan Bollard appears to be driven by forces outside of the areas of growth in New Zealand. He is being ultra conservative suggesting that he wants to keep some of the rates on hold pending a drop. This is a Wellington Public Servant sitting in an ivory tower. I watched TV One news the other night with dismay as a business owner said that he can't make the margins to remain in New Zealand. I presume that this is widespread in New Zealand. Strangely enough, the buck stops with John Key and frankly we expected better when we voted for him!
Peter Hume - 17 July 2012 at 12:50 PM
Unfortunately his focus is entirely on inflation targeting - the wider impact on the economy is ignored.
The CPI numbers released this morning show inflation at 1% for the year - further justification for an OCR cut.
Bushman - 24 July 2012 at 11:56 AM
Do we have another OCR review this Thursday. Is Mr Bollard going to appease our banks again again say that he is going to 'keep our interest rates down at 2.5%'. Look at the banks barking at him that the interest rates don't have to be cut any more. Its a matter of time that the business sector realise that we are being manipulated (is this the IMF directing our country?). Watch Bollard's comments about the ability to cut further, he reakons that interest rates don't affect currency (they do) and watch the banks applaude his non action on lowering any further. Any guesses why this country isn't moving forward?
Peter Hume - 24 July 2012 at 12:58 PM
It is clear that interest rates can't deal with the struggling export sector and the jump in the housing market at the same time. It is time for the RBNZ to implement the prudential controls they have been talking about to deal with the housing market jump so they can cut the OCR.

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