NZ economic situation The anatomy of a recovery for Achieving - - PowerPoint PPT Presentation

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NZ economic situation The anatomy of a recovery for Achieving - - PowerPoint PPT Presentation

Oct 21, 2022 263 likes •535 views

NZ economic situation The anatomy of a recovery for Achieving Results Together Power of 3 August 2014 Dr Ganesh Nana Chief Economist @GaneshAhirao Power of 3 August 2014 slide 1 Stock markets reach for the heavens NZX50 share price

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SLIDE 1

Power of 3 – August 2014 slide 1

NZ economic situation

The anatomy of a recovery

for Achieving Results Together – Power of 3 August 2014 Dr Ganesh Nana Chief Economist @GaneshAhirao

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SLIDE 2

Power of 3 – August 2014 slide 2

Stock markets reach for the heavens

7500 10000 12500 15000 17500 Aug 06 Aug 08 Aug 10 Aug 12 Aug 14 Index

Dow Jones

US stock prices

Dow Jones Industrial Average Index 3500 5250 7000 8750 10500 Aug 06 Aug 08 Aug 10 Aug 12 Aug 14 Index

DAX

German share prices

DAX index 7000 12000 17000 22000 27000 01 Aug 06 01 Aug 08 01 Aug 10 01 Aug 12 01 Aug 14 Index

BSE

Mumbai share prices

BSE Sensex index 2400 3400 4400 5400 Aug 06 Aug 08 Aug 10 Aug 12 Aug 14 Index

NZX

NZX50 share price index

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SLIDE 3

Power of 3 – August 2014 slide 3

But are we really out

  • f the woods?
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SLIDE 4

Power of 3 – August 2014 slide 4

The good ...

125 130 135 140 145 Jul 06 Jul 08 Jul 10 Jul 12 Jul 14 millions

Bureau of Labour Statistics

US employment

non-farm payrolls

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SLIDE 5

Power of 3 – August 2014 slide 5

... the bad ...

10 20 30 Jun 02 Jun 06 Jun 10 Jun 14 %

Eurostat

Unemployment in Europe

% of labour force Greece Spain Ireland Portugal

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SLIDE 6

Power of 3 – August 2014 slide 6

... and the ugly.

05 June 2014

When deciding to lower the key ECB interest rates at its meeting today, the Governing Council of the ECB took the decision to cut the interest rate on the deposit facility to -0.10%.

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SLIDE 7
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SLIDE 8

Power of 3 – August 2014 slide 8

NZ’s attractiveness returns

  • 25

25 50 Jun 02 Jun 06 Jun 10 Jun 14 000s

Statistics NZ

Net permanent migration

annual totals

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SLIDE 9

Power of 3 – August 2014 slide 9

Or, more precisely, Oz attraction declines

10 20 30 40 50 Jun 84 Jun 89 Jun 94 Jun 99 Jun 04 Jun 09 Jun 14 000s

Statistics NZ

Flow of NZ citizens across the Tasman

annual totals departures to Australia arrivals from Australia

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SLIDE 10

Power of 3 – August 2014 slide 10

Strong employment growth

dominated by CHC and AKL

  • 20

20 40 60 Canterbury Auckland Wellington Otago Mana-Wang Northland Nel-Marl & WC Gisb & HBay Bay of Plenty Taranaki Waikato Southland 000s

Statistics NZ

Employment change by region

Jun 14 cf Jun 13

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SLIDE 11

Power of 3 – August 2014 slide 11

Sector growth remains imbalanced

400 500 600 700 800 900 Jun 04 Jun 06 Jun 08 Jun 10 Jun 12 Jun 14 000s

Statistics NZ; BERL calcs

Tradable sector employment

actual number 1,200 1,300 1,400 1,500 1,600 1,700 Jun 04 Jun 06 Jun 08 Jun 10 Jun 12 Jun 14 000s

Statistics NZ; BERL calcs

Non-tradable sector employment

actual number

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SLIDE 12

Power of 3 – August 2014 slide 12

Credit use shapes recovery

  • 5

5 10 15 20 25 30 Agriculture Non-agric business Consumer Housing %

RBNZ

Change in sector credit

Jun 2014 cf Jun 2008

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SLIDE 13

Power of 3 – August 2014 slide 13

Business investment recovering

2.0 2.5 3.0 3.5 4.0 Jun 04 Jun 06 Jun 08 Jun 10 Jun 12 Jun 14 milion m2

Statistics NZ

Non-residential building consents

12-month total area

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SLIDE 14

Power of 3 – August 2014 slide 14

House building catch-up in progress

4 8 12 16 Jun 04 Jun 06 Jun 08 Jun 10 Jun 12 Jun 14 000s

Statistics NZ

New house consents

12-month totals Auckland Canterbury rest of NZ

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SLIDE 15

Power of 3 – August 2014 slide 15

Rebalancing, at best, tentative

60 90 120 150 180 Mar 94 Mar 99 Mar 04 Mar 09 Mar 14 %

RBNZ

Household debt

as % of nominal disposable income

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SLIDE 16

Power of 3 – August 2014 slide 16

$Kiwi keeps inflation in check

45 55 65 75 85 Jul 94 Jul 99 Jul 04 Jul 09 Jul 14 Index

RBNZ

NZ$ TWI exchange rate

monthly average

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SLIDE 17

Power of 3 – August 2014 slide 17

But tradeables looking shaky

excluding dairy and forestry

20 30 40 50 Jun 05 Jun 08 Jun 11 Jun 14 $bn

Statistics NZ

Merchandise export receipts

12-month totals 20 30 40 50 Jun 05 Jun 08 Jun 11 Jun 14

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SLIDE 18

Power of 3 – August 2014 slide 18

Tourism receipts also struggling

6 7 8 9 10 Mar 05 Mar 08 Mar 11 Mar 14 $bn

Statistics NZ; BERL

Tourism export revenues

annualised totals

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SLIDE 19

Power of 3 – August 2014 slide 19

And the rebalancing continues ...

  • 16
  • 12
  • 8
  • 4

4 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 % of GDP

Current account balance of BoP

as % of GDP

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SLIDE 20

Power of 3 – August 2014 slide 20

Another dimension to the re-balancing

resources

  • r

wealth

consumer goods and services investment to replace investment to grow

for today

for tomorrow

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SLIDE 21
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SLIDE 22

Power of 3 – August 2014 slide 22

Overall investment effort remains mediocre

10 12 14 16 18 20 Mar 88 Sep 94 Mar 01 Sep 07 Mar 14 %

Non-hsg investment

as % of GDP

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SLIDE 23

Power of 3 – August 2014 slide 23

Despite opportunity of a generation

700 800 900 1000 1100 1200 1300 1400 1926 1931 1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 Index 2002=1000

New Zealand terms of trade index Korean War wool price boom 1967 wool price shock World crop failures 1st oil shock Great Depression 2nd oil shock China & India

  • pen up to

trade and Berlin wall comes down GFC WWII East-Asia financial contagion

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SLIDE 24

The world is changing

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SLIDE 25

Keep it simple

invest to maintain invest to endow invest to grow WEALTH