PROPERTY INVESTOR LANDLORD ECONOMIC NEWS & ALERTS AUSTRALIA/NEW ZEALAND

Saturday, November 7, 2009

NZ is not Australia, but could be their lucky neighbour

Dr Bollard said New Zealand could improve its prospects by taking advantage of Australia’s very strong future growth potential. “Australia is a lucky country, but we could be a lucky neighbour.”

Australia is entering a new minerals boom, investing heavily and encouraged by new finds, re-opening markets, bottlenecks and strong prices. Strong investment and export growth would mean big challenges for Australian policy. “This all means an economy that looks less like New Zealand.”

“New Zealand and Australia have very different resource endowments, financial markets treat us like Australia, but actually we are quite different. We talk about catching up with Australian incomes, but we have better chances of taking advantage of their growth.”

In New Zealand, the housing market has reversed some of the decline

In New Zealand, the housing market has reversed some of the decline in prices experienced over the past couple of years and a very gradual increase in household spending appears to be taking place. Government spending is also supporting activity. Business spending, however, remains weak and credit growth is very subdued.
“In contrast to current market pricing, we see no urgency to begin withdrawing monetary policy stimulus, and we expect to keep the OCR at the current level until the second half of 2010.”
The Official Cash Rate (OCR) remains unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: “There are welcome signs that economic activity is growing again.

RBA RAISED CASH RATE 25 BASIS POINTS EFFECTIVE 4TH NOV 09

STATEMENT BY GLENN STEVENS, GOVERNORMONETARY POLICY
At its meeting today, the Board decided to raise the cash rate by 25 basis points to 3.5 per cent, effective 4 November 2009.

The global economy has resumed growth. With economic policy settings likely to remain expansionary for some time, the recovery is likely to continue during 2010 and forecasts have been revised higher. The expansion is generally expected to be modest in the major countries, due to the continuing legacy of the financial crisis. Prospects for Australia’s Asian trading partners appear to be noticeably better. Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets. For Australia’s trading partner group, growth in 2010 is likely to be close to trend.