Prime Minister John Key thinks the government will be able to stick to its surplus and debt tracks if Asian economies stay de-coupled from the economic turmoil in Europe and the United States, following figures showing the New Zealand economy was stagnant in the second quarter this year.
He said a slightly lower currency would help. The New Zealand dollar has fallen from a record post-float high over 88 US cents at the start of August to just under 78 US cents this morning.
GDP figures released by Statistics New Zealand last week showed the economy expanded 0.1% in the June quarter from the March quarter, following 0.9% growth in the March quarter.
Speaking on TVNZ’s Breakfast programme this morning, Key noted Stats NZ had upgraded first quarter growth from 0.8% to 0.9%, and said the Reserve Bank and Treasury were more optimistic about the second half of the year due to the effect of the Rugby World Cup.
The Christchurch rebuild was being pushed back as demolition took place, but it was shaping up to be a big boost to growth next year, Key said.
“Overall, if you look at our economy, we’re starting to get back on that track to get back into surplus, our debt level’s much lower than the Eurozone, we’re growing,” he said.
Key said he thought the government would be able to stick to its track to surplus in 2014/15.
“If you look at our economy overall, we’re producing some great numbers. We have grown eight of the last nine quarters,” he said.
“It’s going to help with a slightly lower exchange rate that’s taking place at the moment - if that can be there for a bit longer it will help our export sector. The big challenge for New Zealand – it’s the same one that Australia faces – is will Asia stay de-coupled from Europe and the United States?” Key said.
There was a good chance that Asian growth would stay de-coupled from the turmoil hitting Western economies, he said.
“The general view, Bill English was saying to me, from the IMF and the World Bank is that China will continue to grow at 8-9%. If that’s the case, then Australia stays strong. And if China stays strong and Australia stays strong, they’re our two biggest markets, and that helps us,” Key said.
'Markets honing in on those in trouble'
Meanwhile, speaking to Mike Hosking on Newstalk ZB, Key said there was certainly tightness again in international markets, and real concern about some countries and lending institutions, with the liklihood of a Greek default rising.
Markets were being more specific about who and what they focussed on, he said. In 2008 there was a blanket view that lending markets were closed, whereas now markets were honing in on those banks and countries that were more risky.
“The good news from New Zealand’s point of view is we’re in much better shape than a lot of other countries,” Key said.
New Zealand’s borrowing requirements were “very low,” and, significantly lower than they were even last year, he said.
'We've got a plan'
On Breakfast, Key said the government's economic plan, which included infrastructure spending and changes to the tax mix, meant New Zealand would become more competitive and put it in a better position to handle the global troubles.
“You’ve got to accept that we’re an export-facing economy, and if the rest of the world slows down, of course that will have some impact on us. That’s what’s happening in Europe and the United States," Key said..
“But if you look at the plan that we’ve had, that plan’s been very, very strong, actually. Whether it’s been rolling out infrastructure and making sure that we are competitive, the tax system that we’ve got," he said.
"We’ve got interest rates at a 45-year low – we’ve been taking pressure off the Reserve Bank there. A plan to get back into surplus. All of those strong macro-economic policies make New Zealand competitive. Most countries would trade their right arm, actually, for our position that we have at the moment, which is, one of the best performing economies out there. We’re growing, others are not.”
(Updates with comments on Newstalk ZB)
36 Comments
What a load of rubbish.
There will be no growth from ChCh. The bullies at CERA think that by pulling down buildings that they are making progress, while in fact they are to put in bluntly, pissing everybody off and giving zero confidence in anything down here.
Most commercial property owners are just so annoyed they intend taking their insurance monies elsewhere and sitting on the vacant land. CERA and Brownlee will have to build their own city at this rate, but with what money??
It has been the biggest balls up in NZs history and all involved including Key should be sacked.
By the time EQC realise that the cost will be $12b plus, and the GOVT is on the hook for an extra $5b+, it will be too late and half the city will have left.
Decisive action needs taken now. Stop stupid demolition. Engage with owners. Open the bloody cordon. Demolish the dangerous high rise buildings not the 2 storey heritage. Stop making stupid decisions about land. And for God's sake sort out the insurance.
Bullies get nothing done. Mentors do.
They are so incompetent they don't deserve a second term.
Give us a hung parliament, at least that way nothing will get done in Wellington, which will be much better for the rest of the country!
re chch insurance--no reinsurance for 2--6 years ????
http://www.stuff.co.nz/the-press/5678407/Quake-data-back-to-normal-in-2014
No reinsurance, no rebuild.
I've been negotiating to buy some commercial land in Colombo St, forget that.
Finding out what CERA can do (see my comment below about the demo order), I'm now more than seriously thinking about taking the $4-5m insurance money we will get, dump the remaining $7-8m in ChCh property and buggering off to Australia.
And I'm a loyal local! I don't want to leave, but I feel I'm being evicted.
Hell, I might even vote Labour just for the hell of it! (instead of ACT, I was formerly a member of the National Party BTW).
"At the moment, to my knowledge, none of the primary insurers want to expand their exposure in Christchurch," Gerry
FFS what does it take before the idiots in the Cabinet open the door to booting the AMI bosses out of their overpaid positions and nationalising the company which is right now only surviving due to govt support....and offering insurance cover where the private profit motive mob refuse to go.
Nothing but a silly belief that 'private knows best'. This foolishness in the face of reality on the ground will cost national dearly as the shite spreads and sticks to the region. National risk being tarred with their own blind belief in everything private.
The truth is the insurance business is a scam waiting for an accident and betting on fear bringing in a fat profit right up to the day the company goes bust leaving countless people in the shite and the bosses sailing off in their pleasure yachts to their mansions overseas.
I agree they have an inability to provide consultative holistic policy = no idea what they are doing.
The reality is the country doesn't care, the locals are too shell shocked, the authorties are too arrogant to listen.
However where we differ is that I find many in Christchurch wish to invest in commercial property unlike yourself (including overseas investors), we have had to beef up our Christchurch office given demand. Regardless of the CCC proposed new compliance code, deficient depreciation deferral scheme, continually sinking land/ laterial spread in the CBD...not to forget insurance issues.
A classic example of short sited policy is the current mess being made of the schools throughout Christchurch from staff losses imposed by the ministry. I know of three familes leaving CHCH with the key decision being the schools now can't provide a settled environment for their children.
Chris I apprecaite your comments as they add to my own view on the ground yet don't say to much here as most are commentators with little knowedge on the real stuff happening...
Yes Chris, I have been saying for a while, once the commercial boys step away from the city, there would be no growth, no need to worry about opening up large areas of land when the jobs go as well. They are trying to put a huge amount of spin on their decisions but the reality is the rebuild will be long and slow and vey little return from a commercial point for a long time, so easier to shift your money away from the city.
You're right FCM. The fact that they think that there will be a demand for "thousands" of sections is laughable. Section sales are struggling right now despite thousands of green zoned sections becoming available at some stage soon when insurances are sorted. Prime lots in Merivale/West St Albans are available at essentially around $200k for a 350m2 townhouse site (on sites where there were brick homes) and not selling, yet monkey developers think they can sell similar sized lots in Belfast in their flash new developments for the same or more money??
There is so much prime land on the market in heartland Fendalton that prices will surely plummet soon.
But but to leadership, it's just absolutely ridiculous what is going on.
CERA added a building we have plans to fix (timber framed house) to their demolition list. No consultation. They have given us 10 days to organise demolition. Our engineer says it perfectly fixable and we bloody well intend to fix it.
CERA are lunatic megalomaniacs who think they are going to build a brave new world. They're friggin nuts, that's what they are.
We need a total change of direction. 12 months of failure is surely enough reason.
The media need to tell NZ the truth.
1. There is no way EQC is limited to $8b. It could run to double that at worst.
2. There is no good reason for demolition on the current scale. Particularly not of our heritage and identity.
3. The city will not be rebuilt in any reasonable timeframe.
4. Similar events could strike Auckland or Wellington at any time.
5. That the Government has no friggin idea what they are doing.
John Key is hearing what he wants to hear. The "China Miracle" is undergoing, at best, a correction as we speak.
The New York Times:
"the country’s huge manufacturing sector is starting to slow and orders are weakening, especially for exports. The real estate bubble is starting to spring leaks, even as inflation remains stubbornly high for consumers — despite a series of interest rate increases and ever-tighter limits on bank lending.
Because China’s mighty growth engine has been one of the few drivers of the global economy since the financial crisis of 2008, signs of deceleration could add to worries about the global outlook.
A survey of Chinese purchasing managers, just completed by HSBC and Markit Economics, shows a third consecutive month of contraction in the manufacturing sector. The release of the survey results on Thursday contributed to a global slide in stock markets that day.
Meanwhile, huge loans that Chinese banks have made to state-owned enterprises and local governments over the last three years could cause trouble if the economy does slow.
If China does allow its currency to rise more quickly and if its trade surplus narrows, that could help economies elsewhere. But too much of a slowdown in China could simply add to the world’s financial gloom.
Chinese exporters are particularly worried.
Nicole Huang, the sales manager at the Dongguan Lianyi Sport Goods Company, a maker of beer coolers, diving suits and other products in the industrial hub city of Dongguan, said the number of orders had dropped 5 percent so far this year, and the average size of each order had also begun to shrink.
And instead of the labor shortages that plagued many manufacturers last year as workers sought better jobs elsewhere, more people now seem willing to accept assembly-line tedium. Short term, that could help exporters. But it could be an early sign of looming unemployment problems.
“At least it is easier now for us to hire workers who come into our factory looking for work, after seeing our job notices posted outside,” Mr. Huang said. “Before, no one would respond to these notices.”
The sentiments of investors and economists inside and outside China have taken a bearish turn in recent weeks. As global stock markets have tumbled, the Shanghai A-share stock market has fallen 14.7 percent since July 15. That includes a further decline of 0.4 percent on Friday.
The most worried economists are those who follow China’s manic monetary policy. The central bank oversaw a huge stimulus effort in 2009 and 2010 in response to the global economic slowdown, rapidly expanding its issuance of money and then encouraging banks to lend and relend it. Broadly measured, the money supply surged 53 percent in two years.
The extra cash has sent inflation at the consumer level surging to more than 6 percent even by official measures, which tend to understate true inflation for methodological reasons.
With inflation now running at more than twice the regulated interest rate paid by banks for deposits, millions of Chinese have been betting their savings on real estate. That frenzy had been sending property prices through the roof, at least until the last couple of months."
http://www.nytimes.com/2011/09/24/business/global/chinas-economic-engine-shows-signs-of-slowing.html?_r=1He has no where else to go does he? "John Key is hearing what he wants to hear" of course he is.
This is the guy that is promising us growth to provide jobs and clear the Nation's debt by 2015....
Its also a way to dodge increases in tax, a CGT is coming....there isnt any choice IMHO.....taxes simply have to rise and these guys dropped them.....
The US, EU and Japan are buggered....
So where else is there any positive news for him to lay claim his un-realistic electioneering has a hope in hell?
No where.......
and Labour?
silence.....they cant attack JK on growth with out admiting they have no ammo either....they cant admit peak oil because there will be no growth, so no ammo.....
If they say recession/depression that will cause businesses and spending to shrink if not collapse which is less tax, more un-employed and more WINZ expense....
China will keet growing at 9% yeah sure, doubling every 8 years off into infinity. China is the new housing bubble. You need perfect conditions to have parabolic growth. Where is the money to fuel the growth going to come from? If China starts spending it's reserves to fuel growth say goodbye to low interest rates. With external debt at about 140% GDP, a 1% rise in interest rates will cost us 1.5% of gdp. Good luck.
HK property is off its highs. The stock market is closely allied to property prices and is continuing to fall.
http://finance.yahoo.com/intlindices?e=asia
Went to see this a couple of days ago ( have no money but agents weren't pushy and took us as the only occupants in a 24 seater bus across HK to their office in Jordan to treat us to a disney like promotion - hilarious!)
http://www.lasplendeur.com.hk/ went to an apartment 68 floors up - tiny stepdown balcony with a 600 mm high glass wall separating you from a 200 metre drop - eek!http://www.youtube.com/watch?v=qXzxVdLntWM This is from the approx 20th floor.
Buyers are drying up.
My tuppence worth...Key would do better to keep quiet. Fancy having to ask Bill English "what's going on"....! Key has a poor understanding of what the debt crisis is all about.
Or are we witnessing the final stages of the BS and blathered spin effort...convince the peasants it's not a problem for nz and nz will not have a problem!
Whatever he said is not worth reading or hearing. Key cannot depart from the pathway National took in early 08...to promise to dress in Clark's red skirts and keep the scams running.
China is in the '06/07 american dream and greater property debt phase' but without major markets to sell shite to...QED the entire world economic spluttering engine of trade is stuffed. Too much bloody debt.
But here in nz we have policies aimed at encouraging the splurge and the growth of debt....that's what a low ocr and perpetual debasement of the currency must amount to.
The chch rebuild will save us fluff is being demolished and the loot is waving goodbye to the CCC rorts and greater socialism. Why invest there when prospects are more certain and more substantial elsewhere in nz or overseas. For many of the property owners, this event is a godsent opportunity to bugger off.
Just weeks to go now and the others are putting the finishing touches to their sliced pork promises aimed at fools who think a change of govt will bring relief....what a laugh. Imagine Capt Doctor Norman in charge....or wee Goofy and fellow failures of the past...or gormless the last great RBNZ governor....or Peters the resthome wonderkid.
agree except there is substantial overseas interest in property and business in Christchurch, problem is the supporting policies, or lack of....are actual barriers.
The only good thing to come from this do nothing and pretend is that a lot of people have been able to get their finacial house in order.
JK is just doing what every leader in the western developed economies are doing :
As per Jean-Claude Junker, the man who says "When it becomes serious, you have to lie",
Politics 101 : Believe only the opposite of what politicians says when the situation is serious.
What choice does John Key have? The main job of a leader is is not to tell the truth (although that is an important secondary responsibility!) but to encorage those he leads to believe in, and follow, him ~ even if he suspects the truth, battle is lost. His job, is to put on his armour and be at the head of the charge. Telling the troops that "we are doomed" is likley to see him head into battle, alone; with no hope of victory. Where there is hope, there is life.
True enough NA and therefore vital for those of us with an eye for the future to not accept anything our leaders say at face value. We are being lied to on a daily basis.
There is absolutely no chance that at an economy the size of China's can continue to grow at 9% per year - doubling every 8 years means quadrupling in 24years.
Oh dear...... NA... what choice, do we have?.....read this any way you want!
We can follow the great leader to our certain demise in the debt debarcle and endless serfdom to a fecken bank....or we can say "off you go boy...lead away...I'll sit back here and record your failure"
We can fathom out the farce and prosper in the Bernanke bubbles, doing what Key did to make his millions....trade.
We can avoid borrowing at all cost no matter how bloody cheap the credit bait.
I'm in the 'sitting back camp' that saved and said "get stuffed" to the bank credit marketing BS that stuffed the country with debt back when the Labour failures fat arses filled the Beehive seats of power.
Most people, everywhere Wolly, wouldn't have a clue about what we are about to face, beyond what they see on TV etc. What you, I and the likes of others in the tiny minority think or do will not affect the masses. My point is, that JK has little option other than to 'not panic the horses', and smile and wave, hoping that it all works out ok. If it does, JK will look like a hero; if it doesn't it can be someone elses fault.
What you, I and the likes of others in the tiny minority think or do will not affect the masses.
Absolutely spot on NA. And if we go by recent opinion polls then we are definately in for more of the same. Both National and Labour will lead us to our ultimate undoing, only difference being one will get us there faster than the other. NZ has already chosen its poison it seems, a slow death.. maybe would have been better for a quicker crash so we can focus on starting afresh. Oh well...
BTW, what ever happened to TV interviewers that ask the hard questions?
Even a good old McPhail and Gadsby would inform the people more than the tripe that is feed to NZ tv watchers on a nightly basis.
Look at the "top ten" readers choices on stuff or the Herald each day. Pippa, rugby and entertainment take the top spots. No one clicks on "crashing sharemarket" stories or stories about the problems in Europe or USA.
We are stuffed.
Nicholas have a read of John Ward, he posts daily, always worth reading.
Bankers, multinational companies, media barons, scam artists, political power-freaks and religious maniacs will lie and lie and lie until they reach the point where, quite literally, they too believe the bollocks. George Orwell understood this, as did Norman Mailer, Aldous Huxley, Aleksander Solzhynetsin, Charles Dickens and a host of other visionaries unwilling to deny the evidence of their experience.after the Elections I hope/ think the PM is going to be in a position to call the shots , actually MMP is responsible for a dumbing down process where the policies NZ needs are watered down to placate the fringes. ACT have some good ideas but Brash has just lost my vote with his potty marijuana decrim kite flying
"PM Key says NZ govt will stay on track for 2014/15 surplus given Asian economies stay de-coupled from global turmoil"
So first thing first; be nice to asians (and the Aussies for that matter).
Last Thursday, ABC News reported about Aussie fans were given bad treatment in RWC - they gently reminded NZ that they were the first to arrive after the CHCH Erathquake and Pike River mine.
If the games ive attended down south are anything to go by that story was an absolute media beat up. The atmosphere has been nothing short of brilliant with plenty of friendly banter. Theres always the drunken boofheads that take it too far but that really needs to be taken in the overall context.
Now you reside in Aussie Matt, perhaps next time the Black caps play in Melbourne you should head along to the MCGs Bay 13 dressed up in your biege kit and see how you get on.Me thinks its abit of the pot calling the kettle black.
From what we've seen of the RWC on ESPN , it looks like a winner . The fans appear to having a brilliant time . Few spare seats in the stadiums .
..... and some damn fine rugger , too . That Argentinian / Scotland match was a ripper .
[ my personal favourite being the expression on the Wallabies' faces after the ref blew full time in their game with Ireland ....... cobberdiggermate ! ]
Could well be only a small bunch of d*ckheads that took things too far but the news was well reported here in Australia, quite sad really.
But, in my own experience (I am asian) I get more names calling in Auckland than here in Brisbane.. And I was told before I left NZ that Brisbane is a redneck city... Go figure!
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