Collision Repair Association Conference – 190413slide 1

The post-crises worldor, the new normal

presentation to

Collision Repair Association 2013 Conference

Dr Ganesh NanaChief Economist

Business and Economic Research Ltd

19 April 2013

Collision Repair Association Conference – 190413slide 2

The new normal• which two economies had a 60% share

of the world economy 2000 years ago?• which two economies still had a half

share in the world economy in 1820?

old

Collision Repair Association Conference – 190413slide 3

The debt crisis in a nutshell

the gaps between earning and

spending

NB: its about nations, not governments

-500 -400 -300 -200 -100 0 100 200 300

United StatesSpain

ItalyAustralia

IndiaBrazil

FranceIndonesia

Hong KongThailandMalaysia

KoreaSingapore

TaiwanNetherlands

NorwaySwitzerland

JapanGermany

China US$bn

Collision Repair Association Conference – 190413slide 4

Austerity is underway– but cost is high

4

6

8

10

12

Feb 01 Feb 05 Feb 09 Feb 13

% Unemployment in EU% of labour force

Collision Repair Association Conference – 190413slide 5

At least US heading in right direction

3

6

9

12

Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13

%Unemployment in US

% of labour force

Collision Repair Association Conference – 190413slide 6

As global economic engine splutters

0

3

6

9

12

15

Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12

%pa

MOSPI; National Bureau of Statistics of China

GDP growth% change on previous year

India China

Collision Repair Association Conference – 190413slide 7

But our neighbours are good mates

0

1

2

3

4

5

6

Dec 02 Dec 04 Dec 06 Dec 08 Dec 10 Dec 12

%pa

Australian Bureau of Statistics

Australian GDP growthannual % change

Collision Repair Association Conference – 190413slide 9

Business environment remains tough

-8

-4

0

4

8

12

16

Agriculture Business Households

%Change in sector credit

Jan 2013 cf Jan 2009

Collision Repair Association Conference – 190413slide 10

As banks restore their reserves

4

5

6

7

8

9

Jan 05 Jan 07 Jan 09 Jan 11 Jan 13

%Banking sector balance sheet

reserves as % of total liabilities

Collision Repair Association Conference – 190413slide 11

So business investment remains subdued

2.0

2.5

3.0

3.5

4.0

Jan 03 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13

milion m2

Non-residential building consents12-month total area

Collision Repair Association Conference – 190413slide 12

At least house building recovery is underway

10

15

20

25

30

Jan 07 Jan 09 Jan 11 Jan 13

000sNew house consents

12-month totals

Collision Repair Association Conference – 190413slide 13

while consumers remain cautious

0

4

8

12

Feb 07 Feb 09 Feb 11 Feb 13

%Electronic card transaction values

12-month % change on year earlier

Collision Repair Association Conference – 190413slide 14

... but, are still spending

0

4

8

12

Feb 07 Feb 09 Feb 11 Feb 13

%Electronic card transaction values

12-month % change on year earlier

MV sector excl fuel

Collision Repair Association Conference – 190413slide 15

Motor - challenges

100

150

200

250

Feb 05 Feb 07 Feb 09 Feb 11 Feb 13

000sMotor vehicle registrations

annnualised totals

Collision Repair Association Conference – 190413slide 16

• legislative* safety (older vehicles?)* environmental standards* WOF changes

• household income pressures• roading investment pressures• public transport options

Motor - challenges

Collision Repair Association Conference – 190413slide 17

Business size in motor industry

0%

20%

40%

60%

80%

100%

Motor

Composition of motor industry

10+ employees

6 to 9 employees

1 to 5 employees

self-employed

Collision Repair Association Conference – 190413slide 18

With a few good stories

0

3

6

9

12

15

Jan 04 Jan 07 Jan 10 Jan 13

$bn

Statistics NZ

Dairy export receipts12-month totals

Collision Repair Association Conference – 190413slide 19

Another promising story

0

1

2

3

Jan 04 Jan 07 Jan 10 Jan 13

$bn

Forestry export receiptsannualised totals

Collision Repair Association Conference – 190413slide 20

… and another …

0.0

0.5

1.0

1.5

Jan 04 Jan 07 Jan 10 Jan 13

$bn

Wine export receipts12-month totals

Collision Repair Association Conference – 190413slide 21

Next to an average story …

3

4

5

6

Jan 04 Jan 07 Jan 10 Jan 13

$bnMeat export receipts

12-month totals

Collision Repair Association Conference – 190413slide 22

4

5

6

7

8

Sep 03 Sep 06 Sep 09 Sep 12

$bn

Statistics NZ; BERL calcs

Tourism export revenuesannualised totals

Or, a not so good story

Collision Repair Association Conference – 190413slide 23

But, our houses are worth more

150

200

250

300

350

400

Jan 03 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13

$000s

REINZ

Median house sale price3-month average

Collision Repair Association Conference – 190413slide 24

And so are our Kiwi dollars!

45

52

59

66

73

80

Feb 01 Feb 04 Feb 07 Feb 10 Feb 13

IndexNZ$ TWI exchange rate

monthly average

Collision Repair Association Conference – 190413slide 25

So export sector struggles

20

30

40

50

Jan 04 Jan 07 Jan 10 Jan 13

$bn

Merchandise export receipts12-month totals

Collision Repair Association Conference – 190413slide 26

As our Achilles Heel imposes more pain

NZ debt in Sep 2008 = $149.9bn

NZ debt in Sep 2012 = $148.8bn

Progress in rebalancing NZ economy

-16

-12

-8

-4

0

4

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

% of GDP Current account balance of BoPas % of GDP

Collision Repair Association Conference – 190413slide 27

The hard yards ahead …“Looking beyond our present circumstances, our future depends on our ability to export.”

Budget Speech, June 1978

Collision Repair Association Conference – 190413slide 28

Economics is …

liquidityswap rates

house pricesinterest rates

inflationleverage

debthedge funds

ratings

Collision Repair Association Conference – 190413slide 29

A lesson in rocket scienceor Economics 101

wealthcreation

investmentspending

resourcedevelopment

exportincome

Collision Repair Association Conference – 190413slide 30

Challenges in the ‘new’ normal• climate change• energy (& related raw materials)• water• food• skilled labour

making

new ‘friends’

or

‘relationships’

Collision Repair Association Conference – 190413slide 31

So, (when/how) will it end?

Collision Repair Association Conference – 190413slide 32

NZ 2002 population

144151157

145132

124141

148148

132122

9882

6458

4324

114

138142

150140

131131

154158156

136123

10085

6863

5540

2412

200 150 100 50 0 50 100 150 200

Under 55–9

10–1415–1920–2425–2930–3435–3940–4445–4950–5455–5960–6465–6970–7475–7980–8485–89

90+

000s

females males

man drought

Collision Repair Association Conference – 190413slide 33

NZ 2012 population

161148148

161171

149134135

149152

147128

11692

7250

3719

8

152141142

152159

149143

148164163

156134

12197

7958

4731

18

200 150 100 50 0 50 100 150 200

Under 55–9

10–1415–1920–2425–2930–3435–3940–4445–4950–5455–5960–6465–6970–7475–7980–8485–89

90+

000s

females males

but the next 25 yrs ???