Spring Creek Highlights Deeper Issues for NZ Inc

Spring Creek Highlights Deeper Issues for NZ Inc

• New Zealand has been surprisingly immune to the forces reshaping the world economy post-GFC. But the retrenchment we are seeing in the manufacturing and mining sectors suggest to us this is changing.

• The RBNZ is one of the few central banks running relatively orthodox monetary policy. This has the impact of importing other countries’ problems, and keeps the NZD above where economic fundamentals justify.

• We believe the RBNZ should be very worried about financial stability in the New Zealand economy, and lean against the high NZD using a blend of creative credit easing and NZD intervention.

• Similarly, there is a growing role for the Government to provide targeted, temporary support to the productive sector. The review of the Spring Creek mine is an important precedent for the Government: providing an opportunity for temporary, targeted relief to a state owned business with both regional and industry significance.

ENDS

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