By Alex Tarrant in Vladivostok
The economic slowdown in China, on the back of the eurozone's woes, could hit the government's 2014/15 surplus track, Prime Minister John Key says.
But the latest advice to the government was it could still hit that target.
Speaking to media at the Asia Pacific Economic Co-operation (APEC) forum in Vladivostok, Russia, Key noted recent comments by Australian Treasurer Wayne Swan that the Chinese slowdown would make it harder for the Australian government to hit its own surplus target.
In New Zealand there was a mixed-picture for the economic outlook, as the slowdown could be mitigated by deteriorating agriculture growing conditions around the world, which would support demand for New Zealand goods and prices.
“I think in terms of the short term, we can’t rule out that China slows down a bit more," Key said on Friday morning (NZ time).
“It’s very Europe dependent. That’s their biggest market; Europe’s slowing more aggressively than had initially been thought at the start of the year," he said.
The slowdown was being reflected in some commodity prices.
"Gas prices are significantly lower, iron ore prices are down, I think, 23-odd percent in the last month or so. So a big shift there," Key said.
There had been quite a substantial write-off of mining stocks in Australia.
In terms of New Zealand it was a “bit of a mixed picture.”
“Because growing conditions aren’t so good around the world, and just with the general increase in demand, you’re seeing dairy prices recovering. That’s a good news part of the story," Key said.
“But in the end, for New Zealand to succeed we need a strong Australia, we need a strong China and Asia, and we need a strong United States and Europe. There are complications there,” he said.
Asked whether it would get harder for the government to meet its 2014/15 surplus target if these trends continued, Key said New Zealand was not immune from global events.
“In the end, the surplus is the difference between two very large numbers, and those numbers, and that tax revenue that will get us back to surplus, is highly dependent on our economy growing, and having the opportunities to grow,” Key said.
“If Asia is weaker than anticipated, that has a direct correlation on New Zealand. You’ve already seen the Australian Treasurer saying their capacity to get back into surplus might be challenged by the slowdown in China," he said.
“So we can’t rule that out. But we’ve always said we’re doing our best to get to surplus, it’s still our advice that we can get there in 20114/15. If the position changes, we’ll come back and communicate that."
“But my very strong preference is for New Zealand to get back to surplus, and to be earning more in the world than we’re spending," Key said
21 Comments
Wasn't it ever thus? - I surely thought the surplus call for 2014/15 was always a publicity stunt which National should have been held to account.. Outrageous nonsense - what else was on the agenda other than a repeat of the 2008/11 borrowing binge? And yet we cannot repay the first term spree - the tough choices are for taxpayers to make, not government's, as those in the Northern Hemisphere are finding out.
Surplus target will be able to be reached ... until it can't...
Like most predictions this is a wild stab in the dark. How on earth did our Government debt blow out to $80b so quickly?? (I thought it was Labour not the gNats who are supposed to be the blood suckers...)
But more importantly what's Alex doing in Russia, Bernard? These websites must be making too much money!!
Anyway he can keep an eye on JK as I'm sure while he's is in Vladi our PryMince'ta will be on the lookout for tips from the local authoritarians on how to ignore the public, nationalise private property from locals, flog off the silver at the lowest price to foreign oligarchs and stifle democracy...
I see on the democracy front he's already onto it cancelling regional council elections in Canterbury until 2016.
The "we know better than the public regime" is in full force - just wait until the 2014 General Election is cancelled too!!! (Sadly however unlikely we seem to be heading on that road with this bunch).
Managed to defer a few costs by also writing for AAP/NZNewswire ChrisJ.
We've never done an overseas trip before, so seeing how it works out. Pretty hectic. The Russians don't do anything half-arsed.
We'd organised a stand-up with Key right out front of the building he delivered his speech in this morning. Instead of just letting him come out the front door to meet us, they put him in a motorcade, drove around for a bit, then stopped back infront of the building to let him out.
At least it's sunny and warm.
Cheers
Alex
Da Alexi, cementing our relationships mit the Communists is good thing for small Country from which to spy on American Capitalist dogs.....ho ho small joke I make, only kidding, have anther Kauffman and inhale your Borscht......
You lucky luck y Man Alex, I bet Comrade Bernardski is green with envy......
I too was aghast at the announcement regarding ECan remaining in administration (i.e. without a democratic election) for further term. I would question the legitimacy of this use of Executive power.
A judicial review should be sought by the electoral public of the region. Such a review would require the Government to provide far more explanation regarding the reason for the decision - and I am near certain the Court would rule their decision flawed/inappropriate - an abuse of Executive powers.
Well Kate, they wouldn't want an elected body getting in the way of growth and by growth they mean this,
http://www.stuff.co.nz/business/farming/7629299/Farm-fetches-5-3m-after…
Check out this comment from another blog;
I'll be waiting for the 'have your say' pamphlet to be rolled out again from Key..although no results are expected again as he still won't have any support at all. These 4 stooges should do as $1400-a-day Bazley says and listen to the public.. 'GET OUT' is what we're saying 'we don't need dairy farmers in charge of our fresh water!' Adams is also a share holder in CPW intent on making Canterbury one big dairy farm and can't be trusted. this Nat ECan has allowed more daily pollution of Lake Ellesmere since taking over, so yes we know it will take even longer to clean up. Do Canterbury a favour and allow us to vote for who cares about our fresh water!
http://www.stuff.co.nz/the-press/news/7631962/ECan-commissioners-staying-until-2016
And here's the detail on her profile;
http://www.national.org.nz/Bio.aspx?Id=48686
No taxation without representation - sure as heck I wouldn't be paying my RC rates when they next came due.
As a kiwi living and working in Oz, I was interested to read Brian Gaynor's piece today:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10832448
Although I agree with much of the piece, I think he is painting a rosier picture for NZ than is jusitifed. In particular, he doesn't touch on the fact that a weaker Oz means there will be more pressure on employment in NZ, as fewer kiwis will migrate to Oz for fewer jobs, and of course some kiwis will return to NZ. Contrary to "official predictions" of 5.7 - 6% unemployment by early next year I think unemployment will jump above 7% as:
- Another year of students graduate with poor prospects
- More older people stay in work
- The Oz economy weakens, meaning Oz provides fewer job opportunities for kiwis
- More kiwis return from a sluggish Uk
- ChCh only mildy picks up
If unemployment does hit around 7% early next year, then the govt's finances are in trouble.
Also he only focuses on the dairy sector, what happens to tourism etc. if Aus and the rest of the world weakens further?
It's true what you say, GBH but with almost all the minerals, not just iron ore, having a big price drop it is a big effect. The other thing is that a huge chunk of the money sloshing around and jobs plus downsteam business are due to the huge expansion in mining and associated infrastructure - ports, railways, miners housing, roads etc plus the mines development. The actual mining itself is highly mechanised. It's the slow down in development that will hit Aussie hard IMHO.
Our economies are full of fluff (dog groomers, nail salons, finance spivs etc) supported by a 'sliver' of real production. That's just the way it is, so a drop in the productive side can have a huge impact overall.
The mining industry directly employs just 1.8 % of the Australian workforce ..... but , as you say , there are flow on effects of a slow-down , plus the fall in other minerals and coal .....
..... the fact that the Oz government has relied so heavily on the promise of a super-profit-taxes on the miners , to balance the books , shows how out of touch from reality they really are .... and even the governor of the RBA ( Glenn Stevens ) has based his OCR settings to suit a robust mining industry , ignoring the bulk of the economy , which has been struggling for several years .....
........ Bernard may disagree with you on the " fluff " element of the economy , as he himself is a financial spiv who loves nothing better than to get his hair re-boofed at Warren & Tarquins' Salon , along with his pet poodle , Alex ......
One of the foremost problems with China,is the anomalous use of "official statistics"
If we use Brian Gaynors example in the Herald eg
Australia's mining boom came on the back of China's booming economy, which spurred a huge number of infrastructure projects and high-rise apartments, all of which required steel.
Chinese steel production soared from just 182 million tonnes in 2002 to 684 million tonnes last year, which generated a huge increase in demand for iron ore because approximately 1.6 tonnes is required for every tonne of steel.
Figures reported over the weekend show the actual production is some 50mmt higher,with accordingly increased inventory ( Listed Chinese comapnies having around 302bUS$ 12 Months stock)
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1102&MainCatID=11&id=20120908000004
Interesting times on Monday for mining stocks and the forex.
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