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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Stay on the downward trend

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The Reserve Bank of New Zealand should move to continue to lower the OCR in response to continued low inflation and a high exchange rate, as well as continuing to implement financial stability measures in mortgage lending, say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive Dieter Adam says, “Our exchange rate remains stubbornly high, and still has a way to move down to reach a more fair value. The exchange rate is currently sitting significantly above what the RBNZ assumed in their last forecasts.”

“The RBNZ should continue its downward interest rate moves to better align New Zealand’s interest rates with those in the rest of the developed world, helping to take some pressure off our exchange rate.

“At the same time, it is apparent that risks remain in the housing market, particularly in Auckland, but with increasing evidence of spread. This poses financial stability risks that can damage our whole economy, as well as significant social problems that we are already seeing – people need to be able to afford homes to live in, both as owners or renters. We are also seeing rising household debt, which appears to be moving back to record levels, adding these risks.

“This is a complicated issue that needs to be looked at from both sides – demand as well as supply. While supply is the core longer term issue, we are already seeing the limitations of this approach in terms of the speed of response, but more needs to be done in this space by government where possible. LVRs were a positive move for financial stability, but had only the expected limited effects on prices. We encourage the RBNZ to continue to look and at and implement other macro-prudential tools that can protect financial stability.

“But the RBNZ cannot fix the issue alone – Government needs to step up. We need to understand what role foreign investors are playing, and the upcoming data release will help. It is positive to see a land tax discussed in response to foreign investors, but we also need to consider the role domestic investors are playing. Investors, both foreign and domestic, are huge driver of demand, influenced by tax imbalances and price expectations – at 41% of the Auckland housing market in data referenced by the RBNZ, investors are making up an increasing share of demand.

“These incentives can push investment activity away from productive investment and towards unproductive assets, pushing up prices. Any serious measure to address housing needs to look at demand from investors as well as increasing supply.” 

tags: rbnz, housing, exchange rate, currency, internest rates, ocr, investors


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