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Most viewed
Investing Report: New Zealand's savings rate collapses
Watch video on our video page here.
Bernard Hickey delivers an Investing Report that looks at fresh statistics on National Saving showing our national savings have collapsed to virtually nothing in the last 5 years from over NZ$7 billion, while our borrowing from overseas has jumped from almost NZ$6 billion to NZ$15 billion.
This is not sustainable.
See the release by Stats NZ here.
Here are Stats NZ's comments on the national accounts for the year ended March 2009:
Gross domestic product (GDP) in current prices increased 2.0 percent for the year ended March 2009, Statistics New Zealand said today. This increase is the lowest since the year ended March 1999 and follows a 7.7 percent increase in the March 2008 year. The latest annual result reflects the impact of the recent crisis in overseas financial markets.
Current prices means the effects of inflation have not been removed, unlike the headline estimates published in the quarterly GDP release. The current price annual National Accounts released today give detailed analysis of the structure of the New Zealand economy up to the year ended March 2009.
Related Topics
Gross operating surplus (business profits) contributed to the low increase in GDP in the March 2009 year, rising 0.3 percent. This compares with an increase of 10.5 percent in the previous March year. Compensation of employees (mainly wages and salaries) increased 4.0 percent for the latest year.
National disposable income measures the total income available to New Zealand residents (from all sources, both domestic and overseas) for spending or saving. In the March 2009 year, national disposable income rose 1.5 percent. The increase is the lowest since the year ended March 1992.
Consumption expenditure (spending) by households and government increased 4.2 percent in the year ended March 2009, the lowest increase since 2001. Household spending increased 2.7 percent in the latest March year, compared with increases in excess of 4.0 percent for the years ending March 1994"“2008. Central and local government spending increased 8.9 percent and 7.0 percent, respectively, in the year ended March 2009.
Investment in fixed assets decreased 3.8 percent, due to declines in investment in residential buildings and transport equipment in the year ended March 2009.
National saving (for the whole economy) was $0.5 billion in the year ended March 2009. This compares with national saving of $4.1 billion in 2008. The increase in spending outweighed the increase in national disposable income, resulting in lower national saving.
18 Comments
This is why interest rates
This is why interest rates will continue to rise (retail rates, if not the OCR) since the banks can't source enough long-term, onshore funding to satisfy longer-term fixed mortage lending demand.
Look at the leap in rates from 3 yr to 4 yr loans - 80bps if I look right now.
The reason for this is that more people want to borrow over 4 years than want to lock in their savings on term deposit for that term, and the RBNZ's requirements that the banks increase their local longer term funding is going to increase those longer term rates to increase supply and reduce demand.
Watch the housing market react over the next year. Investors should sell out now while they can keep their shirts.
Alan.
Government spending increased nearly 9%
Government spending increased nearly 9% (7% respectively).......
STOP THE MADNESS!!!! STOP SPENDING!!! THIS IS INSANITY!!!!!
THE WRITING IS ON THE WALL!!!
Alan is right...which begs the
Alan is right...which begs the question...will the banks be able to reach the 65% capital requirement set by the RBNZ and set to start April 1 2010...fat chance of that. I doubt that much capital is available on the local market...unless we print it!. Seems as though the new tools will be locked away for a year or two more and the offshore borrowing by the banks will continue. Hello higher rates my old mates...coming to sort out the property ponzi economy are we?
Bernard - another great report.
Bernard - another great report. Can you put it up in nzherald?
Are we stuffed? How could property buyers not aware of the situation? How to stabilise the Kiwi dollar under this borrowing spree? Any saviour out there?
Why save....It is WORTHLESS to
Why save....It is WORTHLESS to invest in New Zealand.
That has been proven time and time again.
65%......more like 1% and that BORROWED....from the USA by a MAD-OFFiicial at the RBNZ and the MISS-MANAGER of FINANCE, exponents of the rort is a right... crew.
You have to SPEND to MAKE money.....We are following the AMERICAN DREAM...or is that nightmare..
Luckily there are suckers overseas willing to risk a punt with NZ. Gotta OIL the wheels, just in case we have found some.
Must be a CARRY over from the GOOD old days, when money was yours....not someone else's, so they have some left, or have something to BORROW against.
I am surprised ....Do they not know we are trying to re-inflate the BALLOON.....With the BUFFOONs in the USA..., so FORCING the interest rates DOWN for the next few years....
BOLLARDS....
There is only one remedy.....BUY HOUSES.....(Yeah RIGHT)... Let us import some more SPECULATORS....as long as we can MILK em for 500K plus.
Seems we and they are to PAY yet again for the POLLIES and the BANKS profit margins.
Pay debt with more debt.....and inflated at that......The KIWI WAY.
Do you not think, those PUNTERS from overseas will cotton on SOON...
Cos they will become POORER.....and so it goes on.
Not as if we are investing in BUSINESSES that will raise the money to REPAY the poor suckers a decent return....
That is IF there is any RETURN of CAPITAL....ALA... HANDOVER yer FINANCES and TAKE-THAT..... Sir Humphrey......a key move.
MADOFF is not the only exponent of the PONZI...it seems...nor the RORT.
Rather UN-SEAMLY.....to rob the very people who are BAILING out the good ship......
NZ TITANIC...Maybe those ICEBERGS getting ever closer are a PORTENT.
The Shaky Isles, just got shakier.
Would you TRUST these people with YOUR hard earned DOLLARS.....
We have proved that it is LEGAL to STEAL and LEGAL to CLAIM EXPENSES you are not entitled to, and that it is LEGAL for NAME SUPPRESSION of the CONVICTED felon as long as you are FAMOUS, racist or a POLI-TIT-CIAN or an All Black....you can BANK on it.
It is legal to steal from INVESTORS, as long as it is called a FINANCE COMPANY...and the suckers will never see a return on their money, but the DIRECTORS live in LUXURY on the PROCEEDS....and the AUDITORS and COMMISSIONS, just say thank you very much for the BACK-HANDER.
When did we ever get it so wrong that THEFT and DIS-HONE-STY is a RIGHT....and as someone said....from the left and the centre...too.
NEW ZEALAND is populated and miss-managed by CROOKS and SUCKERS....which one are you.
That TREATY of WAIT-ANGIE said nothing about THEFT from the POOR to pay the EVIL RICH....and by the way, to beat your kid to death, but do not chastise them, poor dears.
We need a super hero......and I do not mean from BRADFORD.
ROBIN HOOD's excuse....in reverse...ROB from the rich to PAY the POOR....so he became a HERO.
HELL-EN, tried the reverse....she gets the jobs for the boys. So did Cull-em.
GUY FAWKES had it right....just wrong ERA....so they killed him too.
DICK-TURPIN at least used a GUN. These people are so craven they boast about it and revile anyone who points out the ERROR of THEIR ways.
MONEY LAUNDERING is supposed to be a CRIME.
CLEAN UP YOUR ACT.....NATIONAL.... NEW ZEALAND FIRST....(for once).
AND stop wasting our MONEY.
Live within my means...not YOURS with your DELUSIONS of GRANDEUR.
Michael Jackson.......not Willie......english....living in NEVER NEVER LAND.
MICHAEL makes more money DEAD, than these people will ever do ALIVE.
But boy can they out spend him.
We import almost everything and
We import almost everything and export our most important capital - the young and smart generation.
What an economy ?
W.Kunz Really, we import almost
W.Kunz
Really, we import almost everything? my goodness, I heard something from news about fake qualifications..... did anyone know what's that all about? is that about some professionals coming here?
Treasury Department announced that the
Treasury Department announced that the US public debt had passed the $12 trillion mark, a record high
Get rid of RWT. That
Get rid of RWT. That would be a positive start.
Bernhard has Kiwisaver (a million
Bernhard has Kiwisaver (a million kiwis or so in the scheme) been factored into this analysis?
Cactus Kate - "Get rid
Cactus Kate - "Get rid of RWT. That would be a positive start." or from Andrew Coleman at Moto, "tax on the difference of gross gain earned and inflation":
http://www.interest.co.nz/ratesblog/index.php/2009/11/11/opinion-an-alte...
and see my comment further down at November 13th, 1:43 pm about creating a fairer, balanced system.
Who wouldn't want that?
Wally Says: "Alan is right…which
Wally Says:
"Alan is right"¦which begs the question"¦will the banks be able to reach the 65% capital requirement set by the RBNZ and set to start April 1 2010"¦fat chance of that......"
Notice how from around early 90s everything starts getting turned around the wrong way....ever increasing till around 2003 and everyone jumps on the credit bandwagon.
It all coinsides with the re vamp and removal of the RB tools...
The markets (including property) needs to be allowed to revalued, and if things had been fixed back when BH was predicting the big doomsday in 2007 then it would have....AND still needs to be made/ALLOWED to happen.
So it boils down to BH and the doomsayers with their 30% rectification, and lack of savings ratios where right. They where only wrong, and assumed measures would be taken things would have been fixed back in early 2008...as the Gov said it would be.
But No...
I still reckon, if the Government reinstated the RB tools back then, we would have had a good old crash, sort the chaff from the hay, and now we would be in a far stronger position to move on now.
It would also have been a good political move.
Yeah we all where well a were, more so back then, the proverbial was going to hit the fan,accepted the fact...and by the next election things would be looking far more prosperous, espec with the work Key is doing on free trade agreements.
I add , anyone noticed that Key is doing (free trade) exactly what the Commonwealth did back in the 1930s, and it worked.
I always have the opinion
I always have the opinion that NZ is just a tiny version of the US...we are a minature in everything they do...including the borrow and spend mentality. The latest statistics shows me i am not wrong. NZ on the surface don't seem to be as badly hit as the US, but that is just a time delay effect cause by our very own welfare system kicking in...which in the short term will help to mask the effect of the recession, but in the medium (not even long term) term will cause an even greater recession /depression.
The problem with NZ is even worse because we cannot print money to repay our debt....
I believe that what you
I believe that what you are seeing here is a consequence of the recession.... incomes fall - particularly business profits, spending increases (thanks Labour Govt) and the balancing item, savings, falls away...
Bg surprise... nothing much to see here people...
no wonder we have a
no wonder we have a bad savings rate with interest rates being held down at a very low level
let them rise to attract savings!
liberte, the real game is
liberte,
the real game is not to get you to save.
Its to get you to leverage up and spend
Boris The difference between NZ
Boris
The difference between NZ and the US (UK as well) is that there has been a big uptick in saving over there from 1.2% to somewhere around 7% (from memory) of GDP as their private debt deleverages. But in good ole NZ we have gone the other way.
It will happen here too as credit tightens. Next year will be a different story.
MIW
Thank You 4 The Great
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