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Hogan
Light Sweet Crude
Joined: Oct 25, 2004
Posts: 1331
Location: Stalag 13
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 Posted: Sun Jun 29, 2008 10:04 pm Post subject: New Zealand's Economy Contracting- Recession Looming |
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New Zealand's Economy Contracts 0.3%
| Quote: | New Zealand's economy contracted in the first quarter, putting the nation on the brink of a recession as soaring credit costs damp domestic demand and a drought crimps exports.
Gross domestic product fell 0.3 percent from the fourth quarter, when it gained a revised 0.8 percent, Statistics New Zealand said in Wellington today. That matched the median estimate of 13 economists surveyed by Bloomberg News. The economy expanded 1.9 percent from a year earlier.
Seven economists expect the economy also shrank in the second quarter, pushing New Zealand into its first recession since 1998. New Zealand's dollar fell to a seven-day low as investors bet the contraction will prompt Reserve Bank Governor Alan Bollard to cut the benchmark interest rate from a record- high 8.25 percent by September.
``Current very tight monetary policy is in appropriate,'' said Shamubeel Eaqub, economist at Goldman Sachs JBWere Ltd. in Auckland. ``We expect rate cuts from September, but July cannot be ruled out as the economy sinks into recession.''
New Zealand's dollar fell to 75.38 U.S. cents at 11:45 a.m. in Wellington from 75.52 cents immediately before the report.
Bollard on June 5 forecast a 0.3 percent first-quarter contraction followed by 0.2 percent growth in the three months to June 30. He said he couldn't rule out a recession.
Rate Outlook
The central bank Governor, who has kept the benchmark interest rate unchanged since July last year, said it is ``likely'' he will reduce borrowing costs this year because slowing growth will stem inflation.
Ten of 13 economists surveyed by Bloomberg say Bollard will lower the benchmark lending rate in September. Two expect a cut as early as the next review on July 24, while one predicts a reduction in October.
Adding to signs the economy won't recover quickly, consumer confidence slumped to a 17-year low in the second quarter, and house sales fell in May to a 16-year low.
Warehouse Group Ltd., New Zealand's biggest discount retailer, today cut its full-year profit forecast by 10 percent as weaker consumer spending prompted a slowdown in sales since May.
``I don't think there's a household in the country that's not under pressure financially from the burden of higher food and petrol costs,'' Chief Executive Officer Ian Morrice said in an interview from Auckland. ``There's been a realization that times have got a lot tougher.'' |
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Looks like even NZ isn't immune.
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Now why didn't I think of that? |
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Graeme
Fission
Joined: Mar 04, 2005
Posts: 2640
Location: New Zealand
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| Posted: Sun Jun 29, 2008 11:55 pm Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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Drifter, It should be no surprise that NZ is part of the world economy hence my interest in this forum. Everyone is affected by high energy costs. In NZ's case, there are other factors at work some of which you've pointed out in the article you posted. But the main reason is a cut in exports of dairy products. Note also that NZ is likely to be the first country to go into recession.
New Zealand could be the first into recession
| Quote: | New Zealand is contracting and could beat the US and UK economies into official recession status.
The Kiwi economy contracted in the first quarter with Gross Domestic Product shrinking 0.3% as high interest rates, rising inflation and falling consumption curtailed activity, aided by a drought that has cut exports of high margin dairy products, the country's mainstay.
Finance Minister Michael Cullen said last week rising fuel and food costs meant the economy is ''facing some quite significant headwinds'' and his department also forecast a contraction in the first quarter. |
livenews
Thanks for your interest in NZ!
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Human history becomes more and more a race between education and catastrophe. H. G. Wells.
Fatih Birol's motto: leave oil before it leaves us. |
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Hogan
Light Sweet Crude
Joined: Oct 25, 2004
Posts: 1331
Location: Stalag 13
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| Posted: Mon Jun 30, 2008 12:28 am Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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| Graeme wrote: | Drifter, It should be no surprise that NZ is part of the world economy hence my interest in this forum. Everyone is affected by high energy costs. In NZ's case, there are other factors at work some of which you've pointed out in the article you posted. But the main reason is a cut in exports of dairy products. Note also that NZ is likely to be the first country to go into recession.
New Zealand could be the first into recession
| Quote: | New Zealand is contracting and could beat the US and UK economies into official recession status.
The Kiwi economy contracted in the first quarter with Gross Domestic Product shrinking 0.3% as high interest rates, rising inflation and falling consumption curtailed activity, aided by a drought that has cut exports of high margin dairy products, the country's mainstay.
Finance Minister Michael Cullen said last week rising fuel and food costs meant the economy is ''facing some quite significant headwinds'' and his department also forecast a contraction in the first quarter. |
livenews
Thanks for your interest in NZ! |
I'm reading your posts again because you seem to have become more open-minded lately, posting both sides of the story. 
I would have thought that NZ would not be affected so quickly by all this because it's more local and has a good agriculture base. But I suppose that all modern economies are very dependent on consumer spending and very susceptible to high gasoline and oil prices. I still think you live in one of the better locations in the world. Post peak, I feel NZ will fare better than many other countries. Good farming / livestock. Not many guns. Not overpopulated. Not connected to any third-world countries.
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cipi604
Heavy Crude
Joined: Aug 14, 2007
Posts: 247
Location: Montreal Canada
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| Posted: Mon Jun 30, 2008 12:41 am Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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| Yeah, NZ it's a good choice for a doomer, but you have to stick to the technology too, not just farming. |
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Graeme
Fission
Joined: Mar 04, 2005
Posts: 2640
Location: New Zealand
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| Posted: Mon Jun 30, 2008 12:50 am Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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I was always in the peak oil camp. I tried to warn our Minister of Energy on two occasions about peak oil. They take their advice from the IEA. Now even the IEA are shifting their position toward ours. Perhaps the IEA staff have been viewing this site, who knows.
I am especially interested in alternative energy because this is ultimately the way that everybody will have to go. I have posted a lot of stories about renewable energy even though some here don't think it will make much difference. We will see!
Thanks for your assessment about how NZ will fair post-peak. I also think the US will fair reasonably well also because of your considerable technical and business expertise! California seems to be leading the way. They have made so much progress lately that I think that their policies may well be adopted nationwide and possibly worldwide. Of course, there is always the potential for setbacks and disasters. I think we are all hoping the best outcome.
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Human history becomes more and more a race between education and catastrophe. H. G. Wells.
Fatih Birol's motto: leave oil before it leaves us. |
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americandream
Light Sweet Crude
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Joined: Oct 18, 2004
Posts: 1923
Location: kiwibush
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| Posted: Mon Jun 30, 2008 1:16 am Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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| Graeme wrote: | I was always in the peak oil camp. I tried to warn our Minister of Energy on two occasions about peak oil. They take their advice from the IEA. Now even the IEA are shifting their position toward ours. Perhaps the IEA staff have been viewing this site, who knows.
I am especially interested in alternative energy because this is ultimately the way that everybody will have to go. I have posted a lot of stories about renewable energy even though some here don't think it will make much difference. We will see!
Thanks for your assessment about how NZ will fair post-peak. I also think the US will fair reasonably well also because of your considerable technical and business expertise! California seems to be leading the way. They have made so much progress lately that I think that their policies may well be adopted nationwide and possibly worldwide. Of course, there is always the potential for setbacks and disasters. I think we are all hoping the best outcome. |
Anymore thanks mate, and you'll make us kiwis look like wimpish pussies.
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kokoda
Heavy Crude
Joined: Aug 24, 2006
Posts: 422
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| Posted: Mon Jun 30, 2008 6:03 am Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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I still think NZ will get through this better than a host of other countries.
I expect the US to fall hard. |
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Tyler_JC
Moderator
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Joined: Sep 25, 2004
Posts: 4542
Location: Boston, MA
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| Posted: Mon Jun 30, 2008 8:06 am Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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New Zealand's fiscal imbalance is greater than America's imbalance on a %/GDP basis.
The current account deficit is in the neighborhood of 8-10%. That's a scary position to be in for a country without a lot of natural resources available for export.
It was only a matter of time before New Zealand's economy consumer economy contracted back to equilibrium.
Never forget that you cannot consume more than you produce in the long term.*
*unless you have the magic money-creating machine of the US Treasury Department.
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lowem
Light Sweet Crude
Joined: Jul 19, 2004
Posts: 1172
Location: Singapore
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| Posted: Mon Jun 30, 2008 11:05 pm Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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Only down 0.3%? That's almost nothing, Singapore is in stagflation right now with exports falling the most in 17 months, pharmaceutical shipments dropped 48.5%, electronics down 8.5% - the 16th consecutive drop. And inflation at 26-year highs.
I'm trying to figure out which country is going to lead the world into global hyperstagflation, if there's such a word. "The prize" goes to the country with the economy that is contracting at the fastest rate with inflation rising at the highest rate.
That'll be one hell of a bind.
Then we'll sit back and see how things unfold (provided you're not in *that* prize-winning hyperstagflationary country!).
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anagami
Light Sweet Crude
Joined: Jul 26, 2006
Posts: 1675
Location: Sudavasa Abodes
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| Posted: Wed Jul 02, 2008 10:44 pm Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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By definition, a recession isn't that bad. A contracting economy can be healthy... and great for the environment. If it includes inflation; making poorer does that believe money has any value... then it's starts to get ugly.
Got Gold?
| lowem wrote: | (...)
I'm trying to figure out which country is going to lead the world into global hyperstagflation, if there's such a word. "The prize" goes to the country with the economy that is contracting at the fastest rate with inflation rising at the highest rate.
That'll be one hell of a bind.
Then we'll sit back and see how things unfold (provided you're not in *that* prize-winning hyperstagflationary country!). |
Zimbabue?
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lowem
Light Sweet Crude
Joined: Jul 19, 2004
Posts: 1172
Location: Singapore
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| Posted: Wed Jul 02, 2008 11:01 pm Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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Yes, Zimbabwe has got to be the current prize winner, with a nearly inexistent economy and 4 million percent hyperinflation.
Well. Second prize then? 
I'm looking at Asian countries next to see who may be the next "winner". It's just that in this "game", nobody really wins ...
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DoomWarrior
Heavy Crude
Joined: May 06, 2008
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Location: Omicron Ceti 3
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Hogan
Light Sweet Crude
Joined: Oct 25, 2004
Posts: 1331
Location: Stalag 13
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| Posted: Wed Jul 09, 2008 8:14 pm Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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Protesting truckers bring chaos to New Zealand city streets
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Protesting truck drivers converged on New Zealand's main cities Friday, slowing traffic to a near standstill as they protested higher road taxes.
The protests were held in 13 cities and major towns to coincide with the morning rush hour.
Police said an estimated 2,000 trucks clogged the streets and motorways of the biggest city Auckland, though total gridlock was avoided as many commuters travelled early to avoid the traffic jams.
About 300 trucks travelled in a convoy through the capital Wellington, sounding their horns as they passed the parliament.
Kelvin Bonney from the Road Transport Forum said truck drivers were delighted by the support.
"We are more than happy, absolutely overwhelmed and it shows the country wants to be listened to," he said.
The truck drivers were protesting the government's decision this week to increase road user charges at a time fuel prices are soaring and the economy is sharply slowing. |
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Seems like truckers are starting to protest world-wide now.
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idiom
Heavy Crude
Joined: Aug 23, 2004
Posts: 474
Location: New Zealand
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| Posted: Wed Jul 09, 2008 10:18 pm Post subject: Re: New Zealand's Economy Contracting- Recession Looming |
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Actually, New Zealand is adding roading taxes. Hopefully getting to a recession early means we power down early, while we can.
NZ is ~80% renewably powered. Its the bit of Coal at the top and the trucks and cars that need to feel pain ahead of time. |
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