Take confidence in economy, NZ told

New Zealanders should "take confidence" our economy is in good shape to withstand the fallout from US and European debt woes, say Prime Minister John Key and top business leaders.
But home buyers and businesses can expect to pay higher interest rates, while the prospects for exporters and the wider economy are likely to be a little gloomier for some months at least, market watchers say.
New Zealand's sharemarket is the first to open this morning after world markets last week suffered their worst falls since the global financial crisis three years ago.
The latest selloffs were prompted by ratings agency Standard & Poor's historic decision to downgrade the US Government's credit rating from AAA to AA+. Adding to the uncertainty is growing anxiety about the ability of several European economies, including Italy, to repay their huge debts and meet interest payments.
Fears are mounting that the US and Europe will fall back into recession, dragging other nations with them.
But while it used to be said that when the US sneezed, New Zealand caught a cold, Mr Key said, America's economic wellbeing was no longer as crucial.
"We might have a sniffle, but it's not going to be full-on influenza as it would have been a few years ago.
"New Zealanders should take confidence from the fact that we are structurally in a much more sound situation than either the US or Europe. We have much lower levels of debt and higher levels of anticipated growth, and we've taken a very conservative approach in our Budgets.
"Our unemployment data is good and our growth data is looking strong. We've got a couple of domestically focused events in the shape of the Rugby World Cup and the Christchurch rebuild that will support our economy, irrelevant of what's happening internationally."
New Zealand was also fortunate to have strong markets in Australia and now China "to insulate against what's happening in our traditional markets".
Fonterra chief executive Andrew Ferrier said his company and other food producers were placed to withstand the turmoil.
"We're fortunate to be in the food industry, because the food industry is much more recession-proof than other industries, and it showed its way through 2007, 2008", he told TVNZ's Q+A yesterday. "But we're not immune to economic volatility and I think, with the downgrading of the US, it's another sign that we are in very uncertain times, and in uncertain times you're going to see our Kiwi dollar move around quite a bit, and both exporters and importers are going to get hit by that."
NZX chief executive Mark Weldon said that, unlike the 2008 global financial crisis which saw a loss of confidence across all financial markets, the current problems were far more contained in the US and Europe.
"I'm not at all worried about Asia and, interestingly, Asia's gone now from being the growth engine of the world economy to the stabiliser, so its role has become relatively more important in this."
He also believed New Zealand businesses were generally sound with many having reduced debt levels.
But there was potential for problems to spread to other financial markets, including those New Zealand banks relied on for part of their funding.