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NZ Economic Update
Rabobank Food & Agribusiness Research
NZ Cold Storage Assoc. Conference18th August 2014
2NZ Cold Storage Assoc. Conference August 2014
Quiz question
One more to start the day...
• Who was the ancient Greek God / Goddess of agriculture?
3NZ Cold Storage Assoc. Conference August 2014
Status of the Global Economic Recovery
Source: IMF & Rabobank, 2014
Growth in global importsGlobal GDP growth by country/region
Source: WTO & Rabobank 2014
Euro area
United States
Japan ASEAN-5
China-2
-1
0
1
2
3
4
5
6
7
8
9
102011 2012 2013 2014f 2015f
An
nu
al G
DP
gro
wth
(%
)
2009 2010 2011 2012 2013e 2014f-20
-15
-10
-5
0
5
10
15
20
25
Developed Developing
An
nu
al ch
an
ge (
%)
4NZ Cold Storage Assoc. Conference August 2014
Lingering doubts... The Income vs. Wealth effects
Source: U.S. Federal Reserve & Rabobank, 2014
U.S. Federal Reserve Quantitative easing... is easing!
0.0
500,000.0
1,000,000.0
1,500,000.0
2,000,000.0
2,500,000.0
3,000,000.0
3,500,000.0
4,000,000.0
4,500,000.0
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
US Federal Reserve Security Holdings S&P 500 (RHS)
Valu
e (
US
D t
rillio
n)
Index v
alu
e
5NZ Cold Storage Assoc. Conference August 2014
Steady recovery in NZ Economic Activity
Source: Statistics NZ & Rabobank, 2014
Private vs. Public Sector Contributions, Q1
GDP growth
Source: Statistics NZ & Rabobank, 2014
Mar
-03
Mar
-04
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12
Mar
-13
Mar
-14
-4%
-2%
0%
2%
4%
6%
8%
Annual change (
QoQ
)
-2
0
2
4
6
8
10
12
14
162012 2013 2014
Annual change (
% Q
oQ
)
6NZ Cold Storage Assoc. Conference August 2014
But the government has played a critical role...
Source: Roy Morgan & Rabobank, 2014
NZ Government Confidence Rating
2008
2009
2010
2011
2012
2013
2014
0
20
40
60
80
100
120
140
160
180
Index v
alu
e
7NZ Cold Storage Assoc. Conference August 2014
Kiwis are migrating home, plus a bunch of others!
Source: Statistics NZ & Rabobank, 2014
Net permanent migration to NZ
Jun-0
3
Jun-0
4
Jun-0
5
Jun-0
6
Jun-0
7
Jun-0
8
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
NZ citizens from Australia All citizens from all countries
Net
mig
rati
on
(p
ers
on
s)
8NZ Cold Storage Assoc. Conference August 2014
Industry contributions to the recovery
Source: Statistics NZ & Rabobank, 2014
Bank lending to select sectorsIndustry breakdown of GDP by select sector
Source: RBNZ & Rabobank, 2014
Agricu
lture
F,B&T
Manuf
actu
ring
Const
ruct
ion
Logi
stics
Fina
ncia
l Ser
vice
s
Health
Car
e-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1-2012 Q1-2013 Q1-2014
Annual change (
QoQ
)
Jun
2004
Feb
2005
Oct 2
005
Jun
2006
Feb
2007
Oct 2
007
Jun
2008
Feb
2009
Oct 2
009
Jun
2010
Feb
2011
Oct 2
011
Jun
2012
Feb
2013
Oct 2
013
Jun
2014
-10
-5
0
5
10
15
20
25
Business Housing Agriculture
Annual change (
% M
oM
)
9NZ Cold Storage Assoc. Conference August 2014
Robust recovery in the jobs market
Source: Statistics NZ & Rabobank, 2014
Employment growth by typeNZ unemployment & labour force participation
Source: Statistics NZ & Rabobank, 2014
Jun-0
4
Jun-0
5
Jun-0
6
Jun-0
7
Jun-0
8
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Full-time Part-time
Annual gro
wth
(Q
oQ
)
Jun-0
4
Jun-0
5
Jun-0
6
Jun-0
7
Jun-0
8
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
0
1
2
3
4
5
6
7
8
64
65
66
67
68
69
70
Unemployment Labour Force Participation (RHS)
Un
em
plo
ym
en
t ra
te
Part
icip
ati
on
rate
10NZ Cold Storage Assoc. Conference August 2014
So what’s got the RBNZ going? ... Wages & Inflation
Source: Statistics NZ & Rabobank, 2014
‘Tradeables’ vs. ‘Non-tradeables’ CPIWage & Consumer price growth
Source: Statistics NZ & Rabobank, 2014
0
1
2
3
4
5
6
0
1
2
3
4
5
6
7
8
9
10Labour cost index (RHS)Headline CPICPI excl. 'volatile items'
An
nu
al ch
an
ge (
% Q
oQ
)
An
nu
al ch
an
ge (
% Q
oQ
)
Jun-0
8
Dec-0
8
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Jun-1
2
Dec-1
2
Jun-1
3
Dec-1
3
Jun-1
4
0%
1%
2%
3%
4%
5%
6%
Tradables Non-tradables
An
nu
al ch
an
ge (
QoQ
)
11NZ Cold Storage Assoc. Conference August 2014
Household are feeling good... but are still a bit careful
Source: Statistics NZ & Rabobank, 2014
NZ & AUS Consumer SentimentNZ Retail Trade
Source: Westpac, & Rabobank, 2014
Jun-0
3
Jun-0
4
Jun-0
5
Jun-0
6
Jun-0
7
Jun-0
8
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Core industries total
Food and beverage services
Supermarket and grocery stores
An
nu
al g
row
th (
% Q
oQ
)
Aug-0
4
Aug-0
5
Aug-0
6
Aug-0
7
Aug-0
8
Aug-0
9
Aug-1
0
Aug-1
1
Aug-1
2
Aug-1
3
Aug-1
460
70
80
90
100
110
120
130
140
NZ
Ind
ex v
alu
e
12NZ Cold Storage Assoc. Conference August 2014
Foreign trade
Source: ANZ & Rabobank, 2014
Commodity pricesNZ Commodity Price Index
Source: Statistics NZ & Rabobank, 2014
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
70
80
90
100
110
120
130
140
150
Annual change (LHS) Index value
An
nu
al ch
an
ge (
MoM
, 3-m
ma)
Ind
ex v
alu
e (
July
-2009 =
100)
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Jun-1
2
Dec-1
2
Jun-1
3
Dec-1
3
Jun-1
4
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
An
nu
al ch
an
ge (
MoM
)
13NZ Cold Storage Assoc. Conference August 2014
Geopolitics... A fly in the ointment or... opportunity knocking?
Source: UN Comtrade & Rabobank, 2014
NZ Exports to Russia, 2013Russia – Top 20 imported products by value, 2013
Source: Statistics NZ & Rabobank 2014
Beef m
eat;
f.c.f.
Citrus
fruit
Pom
e fru
it
Froz
en fi
sh
Poultr
y m
eat;
f.c.f.
Chocolat
e
Palm
oil
0.00
250,000,000.00
500,000,000.00
750,000,000.00
1,000,000,000.00
1,250,000,000.00
1,500,000,000.00
1,750,000,000.00
2,000,000,000.00
2,250,000,000.00
2,500,000,000.00
2,750,000,000.00
3,000,000,000.00
3,250,000,000.00
Valu
e (
US
D b
illion
)
Butte
r
Mal
t ext
ract
Pom
e fru
it
Edib
le o
ffal
Aircra
ft
Frui
t nec
Alum
iniu
m
Ther
apy
appl
ianc
es
Fish
fille
ts
Med
ical
inst
rum
ents
0
20,000
40,000
60,000
80,000
100,000
120,000
Valu
e (
NZD
million)
14NZ Cold Storage Assoc. Conference August 2014
An apple a day keeps Putin away
Source: UN Comtrade & Rabobank, 2014
Not good news if you’re a doctor in Poland!
Russia apple imports by country by value, 2013
Source: Deutsche Welle http://www.dw.de/poland-eats-apples-to-get-back-at-putin-russia/a-17824945
Poland49%
Moldova9%
China9%
Serbia6%
Be-larus3%
Azerbai-jan2%
Chile3%
Italy4%
Ar-gen-tina2%
Bel-gium3%
Other9%
15NZ Cold Storage Assoc. Conference August 2014
Can Kiwis fly? We sure hope not!
Source: RBA, RBNZ & Rabobank, Financial Markets Research 2014
NZD & AUD historical currency movements – Last 12 months
Aug-13
Aug-13
Aug-13
Sep-1
3
Sep-1
3
Sep-1
3
Oct-1
3
Oct-1
3
Oct-1
3
Nov-1
3
Nov-1
3
Nov-1
3
Dec-1
3
Dec-1
3
Dec-1
3
Jan-1
4
Jan-1
4
Jan-1
4
Feb-1
4
Feb-1
4
Feb-1
4
Mar-1
4
Mar-1
4
Mar-1
4
Apr-14
Apr-14
Apr-14
May-1
4
May-1
4
May-1
4
Jun-1
4
Jun-1
4
Jun-1
4Ju
l-14Ju
l-14Ju
l-14
Aug-14
90
95
100
105
110
115
120AUD/USD NZD/USD
Index v
alu
e
(8-A
ug-2
013=
100)
31-Jul-2014 +3m +6m +12m
NZD/USD 0.85 0.86 0.86 0.85
AUD/USD 0.93 0.92 0.90 0.86
EUR/USD 1.34 1.35 1.35 1.30
GBP/USD 1.69 1.70 1.72 1.69
Rabobank currency forecasts
16NZ Cold Storage Assoc. Conference August 2014
In Summary!
Key takeaways
• The NZ economy has affected a robust, private sector led recovery.
• Responsible political leadership has created the necessary conditions for this to happen.
• Population growth provides added momentum, with more & more people finding a reason to move to (and back to!) NZ.
• Risks to the global recovery remain, including near-term geopolitical disruptions to F&A trade.
• Interest rates are set to stabilise for the time being as the RBNZ
assesses recent hikes and observes global markets.
17NZ Cold Storage Assoc. Conference August 2014
Quiz
Who was the ancient Greek god / goddess of agriculture
• Demeter
18NZ Cold Storage Assoc. Conference August 2014
Food & Agribusiness Research and Advisory (FAR)
Marc SoccioSenior AnalystMelbourne, Australia
+61 (3) 9940 8437
Marc.Soccio@rabobank.com
Meet the FAR Oceania research team…
Luke Chandler, General Manager
Hayley Moynihan, Senior Analyst (Dairy)
Michael Harvey, Senior Analyst (Dairy)
Georgia Twomey, Commodities Analyst
Graydon Chong, Senior Analyst (Grains & Oilseeds)
Angus Gidley-Baird, Senior Analyst (Animal Proteins)
Matt Costello, Analyst (Animal Proteins)
A global team of 80 analysts dedicated to delivering insights into the world’s major F&A regions
19NZ Cold Storage Assoc. Conference August 2014
About the Rabobank Group
This document is issued by Rabobank Australia Limited incorporated in Australia (“Rabobank”). The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. This document is for information purposes only and is not, and should not be construed as, an offer or a commitment by Rabobank or any of its affiliates to enter into a transaction. This information is not professional advice and has not been prepared to be used as the basis for, and should not be used as the basis for, any financial or strategic decisions. This information is general in nature only and does not take into account an individual’s personal circumstances. All opinions expressed in this document are subject to change without notice. Neither Rabobank, nor other legal entities in the group to which it belongs, accept any liability whatsoever for any direct, indirect, consequential or other loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. This document may not be reproduced, distributed or published, in whole or in part, for any purpose, except with the prior written consent of Rabobank. All copyrights, including those within the meaning of the Copyright Act 1968 (Cth), are reserved. Australian law shall apply. By accepting this document you agree to be bound by the foregoing restrictions.
© Rabobank Australia Limited, Level 16 Darling Park Tower 3, 201 Sussex Street Sydney Australia, +61 2 8115 4000
With over 110 years of banking experience, Rabobank is the world’s leading specialist in food and agribusiness banking. Founded in the Netherlands in 1898, by farmers for farmers, Rabobank retains its cooperative structure and founding principles while operating in 47 countries around the world.
Rabobank is among the 30 largest financial institutions in the world, based on Tier 1 Capital with a continuing and growing presence in Australia and New Zealand.
Rabobank Australia and Rabobank New Zealand are part of the international Rabobank Group. Rabobank Australia Limited is a leading rural lender in Australia and takes pride reinvesting back into the local agricultural community. Rabobank understands the cyclical nature of agribusiness and takes a long-term view of the industry, using its established network of 61 strategically located branches across the nation to service rural clients.
As well as global knowledge and local market expertise, Rabobank rural managers have a genuine understanding of their clients’ businesses. This unique approach provides a real value-adding resource to help clients achieve their short and long-term business goals.
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