Productivity Will Stay Down Until The Dollar Falls
August 14th, 2009
More discussion on how to bring the dollar down - the NZ Manufacturers and Exporters Association is warning overly optimistic comment and forecasts of a recovery from Reserve Bank Governor Alan Bollard are contributing to the dollars’ rise and threaten any export led recovery.
Assn CEO John Walley says “we risk missing the opportunity to capitalise on the global recovery if the exchange rate stays at these high levels. There have been signs of an upturn in the US and Europe over the past few weeks and our exporters need a lower exchange rate to take advantage.” He says “if nothing is done the dollar is only likely to get higher as confidence returns and international investors seek higher interest rates.”
Walley has a straightforward suggestion - “the continuing inflow of credit also highlights the need for a credit volume control tool to be added to the Reserve Bank’s arsenal. Productivity increases will only follow more productive investment, and such investment simply will not happen unless we see systemic change which improves returns to our exporters.”
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