What’s really happening with the NZ economy?

10 April 2014

There are many mixed signals at the moment. NZIER recently released their quarterly survey of business opinion (8 Apr 14) with the heading, Recovery surges ahead as firms remain the most confident in 20 years.  On the other hand BNZ’s monthly online Retail Index which traditionally reports a five or six percent increase, fell by three percent. Westpac also reported (off the back of Paymark data) that credit card spending had ‘clearly’ slowed in the three months to March. Our second largest trading partner Australia has hit a few road bumps, which in turn will impact New Zealand, and so on…

Our commodity exporters are doing well and so is construction plus manufacturing, however many businesses across mixed industries are still waiting for that same lift. The Reserve Bank can ‘tinker’ with interest rates as much as they like (the long term plan), however move interest rates up too far too quickly, without a proper gauge of the real economy, and a general stalling could occur.

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