new zealand’s economic outlook reserve bank of new zealand february 2009
TRANSCRIPT
New Zealand’s Economic Outlook
Reserve Bank of New ZealandFebruary 2009
Off the record please…
1. International financial crisis
• Huge financial losses
• Credit expensive and scarce
• Big asset price falls
The financial crisis so far
0
50
100
150
200
250
300
350
400
Jan 2006 Jan 2007 Jan 2008 Jan 2009
0
50
100
150
200
250
300
350
400
Bear Stearns
Lehman Brothers / AIG / Freddie & Fannie
US TARP
Basis Points Basis Points
The financial crisis so far
0
50
100
150
200
250
300
350
400
Jan 2006 Jan 2007 Jan 2008 Jan 2009
0
50
100
150
200
250
300
350
400
Bear Stearns
Lehman Brothers / AIG / Freddie & Fannie
US TARP
Basis Points Basis Points
The financial crisis so far
0
50
100
150
200
250
300
350
400
Jan 2006 Jan 2007 Jan 2008 Jan 2009
0
50
100
150
200
250
300
350
400
Bear Stearns
Lehman Brothers / AIG / Freddie & Fannie
US TARP
Basis Points Basis Points
Large credit losses
0
200
400
600
800
1000
1200
Jun qtr 07 Sep qtr 07 Dec qtr 07 Mar qtr 08 Jun qtr 08 Sep qtr 08 Dec qtr 08 Mar qtr 09 (todate)
0
200
400
600
800
1000
1200
losses, Asia
losses, Europe
losses, Americas
Total new capital raised
USD billion USD billion
Large housing market corrections
50
100
150
200
250
1990 1993 1996 1999 2002 2005 2008
50
100
150
200
250
Index (1990 =100)
NZ
UK
US
Australia
2. International economic slowdown
• Slower trading partner growth
• Falling commodity prices
• Lower exchange rate
Much weaker world growth
Trading Partner Growth
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
quarters
quar
terl
y pe
rcen
t cha
nge
Asian Crisis
Tech bubble
Sars
Financial Crisis
0807060504
150
125
100
75
50
25
0
150
125
100
75
50
25
0
$US $US
Commodity prices falling - oil
0807060504
240
210
180
150
120
90
60
240
210
180
150
120
90
60
Index Index
Dairy
Total
Export commodity prices falling
20082006200420022000
80
75
70
65
60
55
50
45
80
75
70
65
60
55
50
45
Index Index
Lower exchange rate providing buffer
3. Effects on the NZ economy
• Pressure on businesses
• Pressure on household sector
• The economy adjusts
20082006200420022000
10
0
-10
-20
-30
-40
-50
10
0
-10
-20
-30
-40
-50
Net % Net %
Lower investment intentions…
20082006200420022000
20
10
0
-10
-20
-30
20
10
0
-10
-20
-30
Net % Net %
…and lower employment intentions
201020082006200420022000
30
25
20
15
10
5
0
-5
-10
-15
1.6
1.4
1.2
1.0
0.8
0.6
0.4
Annual % per 1000 people
House sales(RHS)
House priceinflation
House prices to fall further…
201020082006200420022000
30
25
20
15
10
5
0
-5
-10
-15
1.6
1.4
1.2
1.0
0.8
0.6
0.4
Annual % per 1000 people
House sales(RHS)
House priceinflation
House prices to fall further…
1009080706050403020100
8
6
4
2
0
-2
-4
8
6
4
2
0
-2
-4
AAPC AAPC
…and household spending to remain subdued
1009080706050403020100
6
5
4
3
2
1
0
-1
6
5
4
3
2
1
0
-1
AAPC AAPC
Projection
Means a slowing economy
1009080706050403020100
6
5
4
3
2
1
0
-1
6
5
4
3
2
1
0
-1
AAPC AAPC
Projection
Means a slowing economy
20102009200820072006200520042003
6
5
4
3
2
1
0
6
5
4
3
2
1
0
% %
… and should provide significant inflation relief
Prompting significant OCR reductions
100908070605040302010099
10
8
6
4
2
10
8
6
4
2
% %
Focus on financial stability
• Providing liquidity
• Government Guarantee Schemes
• Other actions
End of presentation