Chris Daniels

Digital business editor for nzherald.co.nz

Light in the economic tunnel?

Despite what the optimists might say, New Zealand, along with much of the world, is in a recession.

This week marks the release of important Gross Domestic Product data (GDP) - expected to confirm the past 12 months of a shrinking economy.

But amid the gloomy numbers, there are signs worth watching for - numbers that might be indicating we've seen the bottom of the current crisis. Here's some of the good and the bad economic news:

Finance Minister Bill English says key economic markers due for release this week will show the economy has shrank by 2 per cent in the last calendar year.
English took the rare step of foreshadowing the official release of statistics on key economic indicators by raising them in Parliament, saying the balance of payments deficit (due to be officially released tomorrow) was now about 9 per cent of GDP - "one of the worst in the OECD".
The Finance Minister said there were some long-term strengths in the New Zealand economy, including a flexible exchange rate and labour markets, a healthy banking sector and relatively low debt and unemployment.

NZ Herald economics editor Brian Fallow has also outlined what we can expect on the economic front this week.

But there was some positive news from the International Monetary Fund, which despite taking a very dark view of the world economy, gave New Zealand a relatively clean bill of health.

Business commentator Roger J Kerr has put together a useful list of postive anecdotes at interest.co.nz for those who might be "completely sick and bored of the doom/gloom/Armageddon economic scenarios for the NZ economy coming from the economists located at local banking and broking institutions".

Overseas, after a long cold winter, the first signs of spring might be starting to encourage optimism. Every move the White House makes is being closely watched and new data analysed - could this be the first glimmer of light at the end of the tunnel?
Wall Street yesterday got the news it wanted on the US economy's biggest problems - banks and housing - and responded with a rally hurtling the Dow Jones industrials up nearly 500 points.
Across the Atlantic in the UK, where the crisis is hitting the banking and financial sector hard, one of Britain's top fund managers said he thought the US and UK sharemarkets may have hit bottom.

But the real concern is closer to home than Wall Street or the City of London. It's jobs - is mine safe, should I take up another offer, is this 9-day fortnight business worth taking up or are employers just using the recession to get bulk up profits?

The number of Aucklanders on unemployment benefits has doubled in the past year as the global recession hits cities harder than the provinces.

But recruitment specialist and nzherald.co.nz blogger Kate Ross says that in spite of "the initial panic in the marketplace with the recession and redundancies, the reality in the market is that candidates do still have options."

Our reliance on the rest of the world and its wealth was highlighted in another, less than optimistic report issued yesterday from credit reporting company Dun & Bradstreet, pointing out that New Zealand economic prospects have fallen in recent months, amid a general collapse in world trade.

And we might be seeing an end to the monotonously regular stories of the brain/brawn drain to Australia. Their economy is shrinking too, so last week we at last saw the welcome headline: Fewer Kiwis leave for Australia.

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