New Zealand’s economic outlook has declined and it’s going to get worse as world trade declines according to credit reporting company Dun & Bradsheet.
New Zealand economic growth was forecast at -1 percent this year, while world economic growth was expected to slow to -1.2 percent, slightly worse than D&B’s forecast in January, the company said in its Economic and Risk Outlook.
Declining world trade, particularly in the Asia-Pacific, and a sharp drop in economic growth for China had significantly heightened the downside risk to New Zealand’s outlook, D&B New Zealand general manager John Scott said.
. . . Increasingly protectionist governments and policies aimed at shoring up domestic banks, which may result in restricted international capital flows, posed big risks to the world economy in coming months, Mr Scott said.
. . . “This requires a unique balancing act from the New Zealand government. They need to stimulate the New Zealand economy but do so in a way that avoids contributing to protectionist trends, both manufacturing and financial, around the world.”
Producing good food for a hungry world is only one half of the equation, as other economies retract their ability to buy from us and the prices they’re willing and able to pay will decrease.
Selling will be even harder if other countries use their deteriorating economies as an excuse to close their borders, threatening the slow progress we’ve been making on freeing up world trade.
Finance Minister Bill English also points to a gloomy picture :
Mr English told MPs that two key economic indicators out this week showed New Zealand faced a “challenge of chronic twin deficits” in the government accounts and balance of payments.
“This week’s statistics will show that the balance of payments deficit for 2008 is in the order of 9 percent of GDP – one of the worst in the OECD – and this week’s GDP statistics will show that output declined in the December quarter to around 2 percent lower than a year earlier and that is the economy will have contracted by about that much,” Mr English said.
There is a silver lining to that cloud of bad news, though. It means we can’t afford protectionist measures which would claw back the hard won gains which have come from freeing up our economy.
