Growing, growing . . .


Westpac economists are predicting 3.5% growth next year.

The next highest forecast is 3 percent, the mean is 2.4 percent and the lowest a measly 1.3 percent, while the Reserve Bank plumped for 2.5 percent.

Factors contributing to their optimistic outlook are:

* Asset prices, particularly housing and equities, had rebounded strongly,

* the country was experiencing a mini migration boom,

* forecasts of global activity continued to be revised upward,

* a dramatic shortfall in houses being built would be a multi-year source of economic growth in a nascent recovery,

* restocking of the extremely low inventory cycle would reinforce the economic recovery, and

* leading indicators, such as business and consumer confidence, were, if anything, stronger than in most other economic recoveries.

Economic recovery will be welcome, but not all growth is good.

Max Bowden’s Business Sense newsletter*  looks at the ASB/Main Report Regional Economic Scoreboard for September. It’s reasonably positive but too much of that positivity is based on rising real estate prices and retail sales rather than productivity.

Auckland and Canterbury scored 3 stars out of five. However that came from increases in house prices and retail spending, construction holding up and an improvement in new car registrations. Retail sales also helped the Bay of Plenty, Manawatu and Wanganui.

Aren’t climbing house prices, retail spending and car purchases part of what contributed to the recession?

In Northland employment picked up, the Fonterra payout helped Waikato, Hawkes Bay had increased visitor numbers and Taranaki was helped by its oil industry and dairying.

The Australian ski invasion  had a positive impact on the Otago economy, That was an unexpected consequence of Kevin Rudd’s recession-busting package and those visitor numbers are unlikely to hold up now the ski season is over.

The newsletter credits the Ranfurly Shield win with boosting Southland’s consumer confidence but the increased Fonterra payout will also have had a positive impact.

The West Coast dropped a star to two as house prices went back. Wellington, Tasman and Marlborough also got two stars.

Increased growth and Westpac’s prediction for more next year are encouraging. But growth based on improved productivity, particularly in export industries, is what we need rather than growth based on increased house prices and retail sales.

*You can can subscribe to Max Bowden’s newsletter here.

Hidden agenda in NZX purchase of CPL?


I greeted uncrtically the news that NZX was buying Country-Wide, publishers of most of of the papers which get delivered free to rural mail boxes, including my favourite NZ Farmers Weekly.

Others aren’t so innocent.

Cactus Kate finds some sharp knives in the NZX Haystack .

Jenni McManus reports  that Trans-Tasman editor in chief Max Bowden has made a Commerce Commission complaint because he thinks NZX is trying to act as regulator in a market in which it would be a participant.

At issue: whether an organisation calling itself a regulator should be cornering the market in anything, let alone a commercial enterprise, by acting as both a player and the market enforcer.

Adolf at No Minister smells something fishy and asks:

How can it be that the regulator of share trading activities in New Zealand companies an be allowed to itself operate trading companies which are not part of its core activity, namely regulation? What happens when one of its own companies transgresses?

Roarprawn also smells something whiffy and agrees with Fran O’Sullivan who questions why the stock exchange is putting on gumboots.

Expanding into publications during the economic downturn is a bold move.

The Cross memo explains that the NZX is getting into an “advertising-reliant media publication” in this climate. She contends print media are the best way to contact farmers while internet access remains slow and inconsistent for rural New Zealand.

“This protects to a certain extent rural publications from the downturn in advertising in mainstream/daily media publication and, second, farmers’ behaviours as the majority still read physical papers instead of accessing the internet for their news and information.”

The memo predicts it will be more than five years before farmers swap to online news services.

I’m not so sure about that, improvements to rural boradband services are moving quickly. We’ve got wireless broadband but discovered by accident we could get a much better service through the phone line now.

I’ve always used “you don’t do rural broadband” to put off people wanting us to change to telephone providers. But when I used that line with a cold-caller on Monday I was told they did and we could get broadband access via our phone line. I phoned Telecom to check and was told that our exchange had been upgraded and our phone line could now deliver broadband.

If that service is as good as promised more country people will turn to the internet for news rather than waiting for the papers which come with the mail – which for us isn’t until early to mid afternoon.

This point is made by Quote Unquote who also has questions about the NZX purchase of CPL.

. . .  there are some astute comments about magazine publishing in general which Weldon could consider – in particular, Rundle’s key line:

To go into the magazine trade now is like starting a stable just as the first Model T Ford rolls off the line.

We’ve been getting a regular stream of change-of-address emails from farming friends who have discovered they no longer have to rely on dail-up access to the internet.

The service we get in the country still doesn’t deliver the ultra-fast speeds available in cities, but it won’t be far away and when it comes, our readinghahbits will change.

You can’t tuck a PC into your back pocket as you do with a paper when you’re heading up the back paddock . But if you’ve already read the news on the net  over breakfast you won’t need to.

The question of who’s going to pay for the news on internet will wait for another day.

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