Nz economy. On the way down the pan.
Oct 19th 2009, 10:38 pm
#1
BE Forum Addict
Thread Starter
Joined: Sep 2006
Posts: 4,298
Nz economy. On the way down the pan.
I heard today the NZ is rocketing towards .76 agin the US$. This apparently spells disaster for NZ's economy. I also learned that floating our currency rather than fixing to the the US$ back in the 80s was a really bad move.
Apparently Korea has fared well doing to opposite and fixing its value to the US. This would have given our tiny currency stability and would have assured our export and tourism had a steady eddy currency (which are both sooooooooooooooooooo valuable to our economy..what else have we got other than the latter two ???????).
Alas the kiwi looks like its going to .80US and some talk of parity. There won't be much of any business left in NZ soon. Who from the US (or the UK) wants to even leave their shores at present with their currencies so devalued. Who would buy kiwi goods out of our country? And petrol is going up inspite of our madly overvalued dollar because the world economy is in bouyant mood. See as usual we get stuffed even with the unbelievable strength of the kiwi. Which isn't nice.
Apparently Korea has fared well doing to opposite and fixing its value to the US. This would have given our tiny currency stability and would have assured our export and tourism had a steady eddy currency (which are both sooooooooooooooooooo valuable to our economy..what else have we got other than the latter two ???????).
Alas the kiwi looks like its going to .80US and some talk of parity. There won't be much of any business left in NZ soon. Who from the US (or the UK) wants to even leave their shores at present with their currencies so devalued. Who would buy kiwi goods out of our country? And petrol is going up inspite of our madly overvalued dollar because the world economy is in bouyant mood. See as usual we get stuffed even with the unbelievable strength of the kiwi. Which isn't nice.
Oct 19th 2009, 11:04 pm
#2
Forum Regular
Joined: Nov 2007
Location: Papatoetoe
Posts: 88
Re: Nz economy. On the way down the pan.
What can we do?? If I thought that I could do something about it I would!
Much to my own dissapointment in myself I have no choice but to bury my head in the sand and hope for the best.
I dont say this lightly, I have never done the sand bit before but its driving me mad watching the $ going down the pan everyday.
Im not looking anymore.
Much to my own dissapointment in myself I have no choice but to bury my head in the sand and hope for the best.
I dont say this lightly, I have never done the sand bit before but its driving me mad watching the $ going down the pan everyday.
Im not looking anymore.
Oct 19th 2009, 11:27 pm
#3
Truth is the safest lie.
Joined: Jul 2008
Location: @ the beach.
Posts: 7,243
Re: Nz economy. On the way down the pan.
But good for the country as a whole because we are net importers and hence have to spend less purchasing the imported goods we desire, hence lessening our trade deficit. As mentioned on other threads I feel any improvement in the buying power of the kiwi peso is a positive thing and importers will be offering even steeper discounts on goods. I’d argue this is good for our biggest industry as well, housing! All that capital banks borrow from overseas is suddenly getting cheaper and servicing those loans is cheap as well.
However if you are in bulk exports (exporting cheese, wood, wool etc.) which utilise cheap labour and abundance of available land in New Zealand then you need to think about you business model.
Those exporters producing high-tech goods won’t suffer nearly as much, they tend to import components which get cheaper and then add value to products buy turning, for instance, a few bits of plastic and motors into a dialysis machine. The value added by the employees in those industries is not diminished by a rising value in a dollar. Id’s argue this is why the South Korean economy is doing well (along with other clever stuff they did and we where and continue to be too stupid to set up, like free economic zones to attract business investors and a better tax code that treated investments equally). In many ways if you float your currency or tie it to some other value is irrelevant and sometime counterproductive, in the end the value of your currency is dictated by the free market even if you choose to fight it.
Every cloud has it’s silver lining after all (Except the one hanging over Palmy this afternoon that the weather forecaster assured me would only bring light showers in the morning before clearing).
However if you are in bulk exports (exporting cheese, wood, wool etc.) which utilise cheap labour and abundance of available land in New Zealand then you need to think about you business model.
Those exporters producing high-tech goods won’t suffer nearly as much, they tend to import components which get cheaper and then add value to products buy turning, for instance, a few bits of plastic and motors into a dialysis machine. The value added by the employees in those industries is not diminished by a rising value in a dollar. Id’s argue this is why the South Korean economy is doing well (along with other clever stuff they did and we where and continue to be too stupid to set up, like free economic zones to attract business investors and a better tax code that treated investments equally). In many ways if you float your currency or tie it to some other value is irrelevant and sometime counterproductive, in the end the value of your currency is dictated by the free market even if you choose to fight it.
Every cloud has it’s silver lining after all (Except the one hanging over Palmy this afternoon that the weather forecaster assured me would only bring light showers in the morning before clearing).
Oct 19th 2009, 11:49 pm
#4
Truth is the safest lie.
Joined: Jul 2008
Location: @ the beach.
Posts: 7,243
Re: Nz economy. On the way down the pan.
Well you could warm up the printing presses and move the reserve banks interest rate from "Hello inflation" to "Kamikaze" mode. This would value the currency down.
If you where really stupid you could go further and start printing money for government to spend ("Quantitative easing") but economically this is suicidal
.
If you where really stupid you could go further and start printing money for government to spend ("Quantitative easing") but economically this is suicidal
.
Oct 19th 2009, 11:57 pm
#5
BE Forum Addict
Thread Starter
Joined: Sep 2006
Posts: 4,298
Re: Nz economy. On the way down the pan.
But good for the country as a whole because we are net importers and hence have to spend less purchasing the imported goods we desire, hence lessening our trade deficit. As mentioned on other threads I feel any improvement in the buying power of the kiwi peso is a positive thing and importers will be offering even steeper discounts on goods. I’d argue this is good for our biggest industry as well, housing! All that capital banks borrow from overseas is suddenly getting cheaper and servicing those loans is cheap as well.
However if you are in bulk exports (exporting cheese, wood, wool etc.) which utilise cheap labour and abundance of available land in New Zealand then you need to think about you business model.
Those exporters producing high-tech goods won’t suffer nearly as much, they tend to import components which get cheaper and then add value to products buy turning, for instance, a few bits of plastic and motors into a dialysis machine. The value added by the employees in those industries is not diminished by a rising value in a dollar. Id’s argue this is why the South Korean economy is doing well (along with other clever stuff they did and we where and continue to be too stupid to set up, like free economic zones to attract business investors and a better tax code that treated investments equally). In many ways if you float your currency or tie it to some other value is irrelevant and sometime counterproductive, in the end the value of your currency is dictated by the free market even if you choose to fight it.
Every cloud has it’s silver lining after all (Except the one hanging over Palmy this afternoon that the weather forecaster assured me would only bring light showers in the morning before clearing).
However if you are in bulk exports (exporting cheese, wood, wool etc.) which utilise cheap labour and abundance of available land in New Zealand then you need to think about you business model.
Those exporters producing high-tech goods won’t suffer nearly as much, they tend to import components which get cheaper and then add value to products buy turning, for instance, a few bits of plastic and motors into a dialysis machine. The value added by the employees in those industries is not diminished by a rising value in a dollar. Id’s argue this is why the South Korean economy is doing well (along with other clever stuff they did and we where and continue to be too stupid to set up, like free economic zones to attract business investors and a better tax code that treated investments equally). In many ways if you float your currency or tie it to some other value is irrelevant and sometime counterproductive, in the end the value of your currency is dictated by the free market even if you choose to fight it.
Every cloud has it’s silver lining after all (Except the one hanging over Palmy this afternoon that the weather forecaster assured me would only bring light showers in the morning before clearing).
Oct 20th 2009, 12:23 am
#6
Enjoying retirement
Joined: Jun 2008
Location: Rural Taranaki
Posts: 320
Re: Nz economy. On the way down the pan.
I'm with Genesis on this one. Despite a 20% (ish) rise in the Kiwi in the last year, I haven't noticed imported goods dropping anything like that much.
And as I've pointed out before, a high Kiwi will cost jobs in exporting industries, the largest of which are dairy, meat and fish, timber, tourism and immigration.
I've no doubt that a high Kiwi will eventually cause enormous damage to the economy.
And as I've pointed out before, a high Kiwi will cost jobs in exporting industries, the largest of which are dairy, meat and fish, timber, tourism and immigration.
I've no doubt that a high Kiwi will eventually cause enormous damage to the economy.
Oct 20th 2009, 12:43 am
#7
Forum Regular
Joined: Nov 2007
Location: Papatoetoe
Posts: 88
Re: Nz economy. On the way down the pan.
Like I said earlier, what can we do about it?
Oct 20th 2009, 1:10 am
#8
Truth is the safest lie.
Joined: Jul 2008
Location: @ the beach.
Posts: 7,243
Re: Nz economy. On the way down the pan.
Do you REALLY think that as a result of the strong kiwi and the apparent effect it has on imports will be passed on to you and me??? You are sadly mistaken. Petrol should be cheaper inspite of a world price hike as our dollar is something like 30 odd percent overvalued..but look at everything you buy importwise from gas to whatever..is any of it getting substantially cheaper. Plus all the forecasters say the strong kiwi IS BAD for NZ's economy looking at it wholistically. I agree with them.
If you want proof that an undervalued currency doesn't mean economic prosperity look at Zimbabwe. The cost of labour is very low thanks to a plunge in their currency value (they printed money rather than charging taxes).
Oct 20th 2009, 2:42 am
#9
BE Forum Addict
Thread Starter
Joined: Sep 2006
Posts: 4,298
Re: Nz economy. On the way down the pan.
But some importer is making money out of that.
If you want proof that an undervalued currency doesn't mean economic prosperity look at Zimbabwe. The cost of labour is very low thanks to a plunge in their currency value (they printed money rather than charging taxes).
If you want proof that an undervalued currency doesn't mean economic prosperity look at Zimbabwe. The cost of labour is very low thanks to a plunge in their currency value (they printed money rather than charging taxes).
Oct 20th 2009, 2:52 am
#10
BE Forum Addict
Thread Starter
Joined: Sep 2006
Posts: 4,298
Re: Nz economy. On the way down the pan.
Nothing. But its a good discussion point I think and those coming who are NOT in the public sector (mind you even those are being hit right now and my local DHB is not employing nurses DESPARATELY needed) need to be aware that NZ is not a good place to be right now jobwise. Its an ugly truth but jobs are being lost to overseas, to fiscal cut backs and the fact that NZ does not have much money to throw around right now.
I am not being negative in the ways of moaning just saying how it is as we have (as I have said in the past) been accused of not letting people know what's really happening and of being too positive and too happy clappy. Unemployment is on an upward trend. For those of who are not established in NZ I am not sure if its a good choice just now. Personally if I was thinking of coming to NZ now (without a totally secure job..and some jobs are almost bullet proof once you are in them )and knowing what I know now about the NZ economy I would be trying to convince Kate to go to Oz...even with their long term water issues. You can always jump ship to NZ when we have weathered the storm.
And no I won't be returning to the Uk as we are well established here and all very happy and Kate has a job that is more secure than gold being in a well funded area of local health. NZ is still very, very wonderful if you are secure here.
Forewarned is forearmed.
I am not being negative in the ways of moaning just saying how it is as we have (as I have said in the past) been accused of not letting people know what's really happening and of being too positive and too happy clappy. Unemployment is on an upward trend. For those of who are not established in NZ I am not sure if its a good choice just now. Personally if I was thinking of coming to NZ now (without a totally secure job..and some jobs are almost bullet proof once you are in them )and knowing what I know now about the NZ economy I would be trying to convince Kate to go to Oz...even with their long term water issues. You can always jump ship to NZ when we have weathered the storm.
And no I won't be returning to the Uk as we are well established here and all very happy and Kate has a job that is more secure than gold being in a well funded area of local health. NZ is still very, very wonderful if you are secure here.
Forewarned is forearmed.
Last edited by Genesis; Oct 20th 2009 at 2:54 am.
Oct 20th 2009, 4:09 am
#11
Cow on the Beach
Joined: Aug 2008
Location: Seatoun, Wellington
Posts: 699
Re: Nz economy. On the way down the pan.
Personally I'm looking forward to paying all those higher ACC levies .....
Oct 20th 2009, 4:23 am
#12
Truth is the safest lie.
Joined: Jul 2008
Location: @ the beach.
Posts: 7,243
Re: Nz economy. On the way down the pan.
Agreed on the shameful state of public spending if not other issues.
My point is that if we had ever bothered to develop industries that didn't rely on milk products or cheap airfares that we probably wouldn't suffer to this extent. Hopefully with the NZ dollar going upwards it will prompt a rethink on promoting tourism and agriculture moving towards industries that can raise productivity and hence wages, which is more like the New Zealand I'd like to live in in the future
.
I think you'll find that inflation is going to become a problem in the not too distant future so the cashrate will go up (REI reports real estate up 8% growth in house prices and the rate is still only 2.5%, that can't go on for long) which may support the value of the NZ dollar or perhaps even drive it up further.
My point is that if we had ever bothered to develop industries that didn't rely on milk products or cheap airfares that we probably wouldn't suffer to this extent. Hopefully with the NZ dollar going upwards it will prompt a rethink on promoting tourism and agriculture moving towards industries that can raise productivity and hence wages, which is more like the New Zealand I'd like to live in in the future
.I think you'll find that inflation is going to become a problem in the not too distant future so the cashrate will go up (REI reports real estate up 8% growth in house prices and the rate is still only 2.5%, that can't go on for long) which may support the value of the NZ dollar or perhaps even drive it up further.
Oct 20th 2009, 6:48 am
#13
Banned
Joined: Oct 2009
Posts: 125
Re: Nz economy. On the way down the pan.
Farming and Tourism ARE the back bone of the New Zealand economy and a high value of our dollar spells bad news. First point you will notice it is the Fuel Pumps as the strength gains against the US$ then the price at the pump drops meanwhile we do not notice the oil price rise then like an elastic band it catchs up and the pump price rises as the effects of the climbing dollar against the oil price balance out.
New Zealand has to small a population base to make any industrial impact on the world economy and has sold itself out to the cheaper labour asian markets even its call centres.
The one thing we can maintain a hold on is tourism no one can take that away from this country although foreign ownership needs to be controlled and reinvested back in the country.
New Zealand has to small a population base to make any industrial impact on the world economy and has sold itself out to the cheaper labour asian markets even its call centres.
The one thing we can maintain a hold on is tourism no one can take that away from this country although foreign ownership needs to be controlled and reinvested back in the country.
Oct 20th 2009, 8:02 am
#14
BE Forum Addict
Thread Starter
Joined: Sep 2006
Posts: 4,298
Re: Nz economy. On the way down the pan.
Farming and Tourism ARE the back bone of the New Zealand economy and a high value of our dollar spells bad news. First point you will notice it is the Fuel Pumps as the strength gains against the US$ then the price at the pump drops meanwhile we do not notice the oil price rise then like an elastic band it catchs up and the pump price rises as the effects of the climbing dollar against the oil price balance out.
New Zealand has to small a population base to make any industrial impact on the world economy and has sold itself out to the cheaper labour asian markets even its call centres.
The one thing we can maintain a hold on is tourism no one can take that away from this country although foreign ownership needs to be controlled and reinvested back in the country.
New Zealand has to small a population base to make any industrial impact on the world economy and has sold itself out to the cheaper labour asian markets even its call centres.
The one thing we can maintain a hold on is tourism no one can take that away from this country although foreign ownership needs to be controlled and reinvested back in the country.
Even GB can't do that so a tin pot nation like ours with a tiny work force and reliance on things to do with udders and bungy jumping ain't gonna cut it. The kiwi loses value quickly or we are in deep, deep shite as a nation.I would personally hate to be reliant on my house keeping $$ being ANYTHING other than a healthcare based wage. Harsh but what I hear on the radio every day is that things ain't looking good for the NZ economy. Alan Bollard needs to get his John Bull printing press out...anyone remeber them..was that the name??
Oct 20th 2009, 9:07 am
#15
BE Enthusiast
Joined: May 2007
Location: Western Sydney For Now
Posts: 434
Re: Nz economy. On the way down the pan.
I am always surprised with this sort of thing that NZ doesn't target higher and well focussed immigration to try and build the population.