Economy as unbalanced as ever

Economy as unbalanced as ever - 23 September

Poor GDP figures have followed an increase in our Balance of Payments deficit demonstrating that the imbalances that have plagued our economy for decades remain, say the New Zealand Manufacturers and Exporters Association (NZMEA). At 0.7 percent, growth over the past year is still very weak and the return to an increasing Balance of Payments deficit shows that economic rebalancing is simply not happening.

NZMEA Chief Executive John Walley says, “The Government has talked at length about rebalancing the economy towards exports, saving and business investment, but the outcome clearly demonstrates this is not occurring.”

“A high and volatile exchange rate still discourages growth in exports and the lack of tax on assets still encourages investment in property rather than businesses in the traded economy. Consistently our message in the second quarter was that manufacturing was slow, and that overall growth in the economy was much lower than was being predicted by bank economists and the Reserve Bank. There was no reason to lift the OCR and every reason it should have been cut this month.”

“The Government’s approach of procuring the best possible advice before jumping into reforms has been admirable, but the advice must be given effect if things are to change in the economy.”

“This latest set of figures shows that fundamental changes are necessary and playing around the edges is not working.”

ENDS

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