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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Financial Risks and Currency Need Continued Focus

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Looking towards the Reserve Bank of New Zealand’s (RBNZ) OCR decision tomorrow, the exchange rate remains at a level that is putting a lot of pressure on manufacturers and exporters. Building financial stability issues, here and abroad also present a significant future risk, say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive Dieter Adam says, “The exchange rate remains overvalued, adding significant pressure to manufacturing and exporting businesses, hitting margins and competitiveness, both in our vital export markets such as Australia, and for those competing against imports in New Zealand.

“We need to see the downward correction of our currency restart. The longer it remains significantly overvalued, the bigger its effect will be on manufacturers and exporting businesses, hitting their ability to invest in the future, through R&D, new equipment and staff. New Zealand manufacturers operate against global competitors, and this investment is vital to ensure we remain competitive and productive into the future.

“We would encourage the RBNZ to continue moving the OCR downward and closer to rates seen in the rest of the world, to spur inflation to the target range and help our currency move along a downward path.

“However, we face a potentially much bigger threat from growing financial stability risks, both in New Zealand and globally. New Zealand’s debt-to-income ratio has now reached levels higher than before the GFC – sitting at 165%, which is significantly higher than a year ago at 159%. This build-up of private debt leaves New Zealand more exposed to global risks, as well as increasing the potential for disturbance in our housing market. This is not an abstract threat to our economy, it is a tangible threat to many New Zealand households exposed to debts they may no longer be able to service if economic conditions change, be that a loss of an income, or an increase in interest rates on their debt.

“We know from experience during the GFC, the large effect such crisis can have on all parts of our economy, especially our manufacturing sector where many rely on export income. In our NZMEA survey, export sales made up 60% of sales for respondents in July.

“The RBNZ should continue their work on shoring up our financial system against potential stability threats and expand their tool-set of macro-prudential tools, including exploring debt-to-income limits on property lending.

“It is worth remembering that RBNZ’s responsibilities currently are inflation management and financial stability. The responsibility for rising housing costs lies with the Government.

“It is important that the work on housing continues, to give the RBNZ the freedom to deal with inflation, stability and the resulting exchange rate. There has been progress on the supply side, with the Auckland Unitary Plan, however, there are still additional measures that could be undertaken on the demand side of the equation. “Says Dieter. 

tags: currency, exchange rate, stability, financial, debt


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