Finance Minister Bill English has reinforced the need for a rebalancing of the economy and improved export performance as New Zealand emerges from a recession that began at the start of 2008. His comments follow a better than expected narrowing of New Zealand's current account deficit in the June quarter, although the improvement was largely due to a falls in imports and the amount of revenue foreign investments earned in New Zealand. English reiterated the need to rebalance the economy around exports and investment and again noted the high New Zealand dollar, which jumped above 71.5 US cents following news today on the current account and also on Fonterra's improved payout forecast. English said Fonterra's announcement today of an improved payout forecast for the 2009/10 season was a good sign for New Zealand's export sector. The forecast was raised by 55 cents to NZ$5.10 per kilogram of milk solids.
The current account deficit improved to 5.9% of GDP in the year to June from a revised 8.1% of GDP in the year to March. The fall in profits flowing offshore was mainly down to a NZ$661 million tax case brought against the Bank of New Zealand (BNZ) during the quarter, which BNZ is appealing against. "News our current account deficit has hit a five-year low is positive," English said. "However this has occurred on the back of a big fall in imports and a drop in company profits flowing offshore "“ largely in the banking sector." "If we want a strong recovery that provides sustainable jobs and growth we need to lift our export performance, which has remained relatively static," he said. "This Government has set out a comprehensive programme to rebalance our economy around exports and investment." "This will be assisted by Fonterra today lifting its forecast payout to dairy farmers from $4.55 to $5.10 per kilo of milk solids." "As we move out of recession, we need businesses to have the confidence to invest and create jobs. The Government's role is to make that as easy for them as possible "“ particularly with the New Zealand dollar at current high levels." "After a decade of lost opportunity, it is important to tackle these medium and long-term challenges head on. That is why this Government is taking the steps to improve our long-term economic performance."
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.