NZ Economic Recovery: High Dollar Hinders Export Led Recovery
October 16th, 2009
After last week’s optimism from Treasury, pessimism this week from forecasters BERL. The group says in the short term a boom in log sales to China and a recovery in the meat trade points to a better economy. But the medium-term picture is not great because a recovery based on the export sector is not on the horizon, with manufacturing back to levels seen in 2003. And the blame for the sorry state of the export sector goes on the NZ dollar.
In its latest forecast, Berl predicts the economy will have begun to grow again in the September quarter after 18 months in recession. But growth will average a tepid 0.2% in both the September and December quarters. It forecasts annual growth of just 1.2% in the year to 2011, much lower than the Reserve Bank’s forecast of 3.1%.
It says the “green shoots” argument falls over because the European recovery remained fragile and the United States economy continued to languish. The kiwi was near the top measured against a basket of New Zealand’s main trading partners, but Berl doubted it would fall far enough to generate a sustained export-led recovery despite the boom in log sales. Log exports were up almost 60% to a record $880m in the July year, with China the main driver.
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