It's best NZ keep its nerve despite global turmoil

People read a sign outside the closed Bank of Greece in Athens. Photo / AP

New Zealand businesses should keep their nerve as international markets are spooked by the Chinese sharemarket sell-off, the closure of Greek banks and even a signal by Puerto Rico that it cannot pay its debts.

Each of these three events illustrates that there is really nowhere to hide when the sentiment in global financial markets starts to sour. Already the NZ dollar has been pushed about. Shares also took a tumble on Monday. But they have not gone into free fall and why would they? Yet?

There will be consequences in coming weeks and months as these three events run their course.

The major issues are China and Greece (at least as far as it affects the perception of a unified Europe).

And the risks around other countries like Spain and Italy if Greece throws in the towel and defaults and they follow suit.

The New Zealand economy is strongly exposed to China's fortunes - lesser so to Europe, which itself could still be majorly affected if cooler heads do not prevail as the sentiment over Greece's unwillingness to put its house in order is tested.

But if there's one thing that the global financial crisis and the major Canterbury earthquakes have taught New Zealand businesses, it is the power of resilience.

John Key was on the money yesterday when he said New Zealand is not immune from the Greece turmoil. But we do have some degree of inoculation from the early spillover effects.

That's because of the built-in resilience of local businesses which got their balance sheets in order after the 2008 global financial crisis.

But also because the Government and key agencies like Treasury and the Reserve Bank are used to managing in the volatile times that were sparked by the subsequent Canterbury earthquakes.

As the Prime Minister noted: "The domestic stimulus is still strong - Christchurch rebuild, Auckland housing issues, just generally, tourism across the country has been very, very strong - so I've always thought the biggest risk is international and this is a factor."

There is still the risk of a tidal wave if panicked investors pull their investments out of Europe.

Calling the lifeguards, either then or now, is not an option.