Export sector leading NZ’s economic recovery
September 1, 2010
From the Bay’s point of view it’s great to see New Zealand’s economic recovery being led by the export side of the economy. Exports are key to our region and have experienced a significant turnaround from the low point of the recession.
I’ve visited lots of Bay businesses recently and it’s clear the wider recovery is still patchy at this point. This is supported by stable rather than growing results for domestic industries like housing and retail, and indicators such as business confidence and the share market.
However the outlook for the export sector is strong. This is particularly so for primary industries which have increased their output and enjoyed good price rises since the middle of last year.
Higher export prices drove a 5.9 per cent jump in the terms of trade in the March 2010 quarter. This is the largest quarterly rise since 1976.
On top of this NZ recorded our second quarterly trade surplus in a row of $389 million (exports greater than imports). Can you believe it – these trade surpluses are the first two since December 2001. No wonder our economy was in a pickle.
While commodity prices (lamb, beef, dairy etc) slipped back slightly in June and July average prices remain higher than a year ago.
So while parts of the domestic side of the economy have been fairly flat – due to the uncertain global environment and the need for businesses and households to pay down large stocks of debt – our export sector is leading New Zealand’s recovery.
This is starting the process of rebalancing our economy towards exports and growth and away from unsustainable borrowing, government spending and consumption.
However, turning around the imbalances that built up over the past decade will require a relentless, long-term focus and commitment. There is no silver bullet. The only way we can permanently lift New Zealand’s economic growth is through many improvements year after year.
Budget 2010 took several steps in that direction – including across the board personal tax cuts from 1 October, which will encourage hard-working New Zealanders to earn and save more. And with these early export results I’m confident we’re heading in the right direction.
Chris Tremain – MP for Napier
