| About CMS | Forex Services | Trading Software | Forex Education | Forex Resources | My Account |
| Institutional Clients |
Introduction
New Zealand is the 60th largest economy in the world with a GDP of $92.51 billion, and a population of 4.2 million. Its economy depends on international trade, mainly with Australia, the United States and Japan. This leaves it vulnerable to growth conditions in the these economies. It's main exports include meat, dairy products, wood and forest products, fish, and wool. These exports and tourism, along with a declining manufacturing sector, do not match the imports of advanced manufactured goods required to sustain the New Zealand economy. Therefore, New Zealands has a large current account defecit.
Go to Central Bank Watch Go to Economic and Financial Profile
| New Zealand's Fundamental Indicators and Chart |
|
| Monthly Data for May, 2008 |
|
| Date | EST | Indicator | Actual | Forecast | Previous |
| 5/4 | 6:45pm |
Labor Costs q/q
|
0.7%
|
0.7% |
1.1%
|
| 5/4 | 11:00pm |
Commodity Price Index (ANZ)
|
-0.3%
|
2.0%
|
|
| 5/7 | 6:45pm |
Unemployment Rate
|
3.6%
|
3.5% |
3.4%
|
| 5/7 | 6:45pm |
Employment Change q/q
|
-1.3%
|
-0.1% |
0.9%
|
| 5/12 | 6:45pm | FPI m/m |
|
0.7%
|
| Central Bank Watch - Latest RBNZ Decision
|
Back to top» |
|
Actual | Forecast | Previous | Revised Form | |
| 8.25% | 8.25% | 8.25% | N/A | ||
|
Provided by: Reserve Bank of New Zealand
RBNZ Governor Alan Bollard reiterated the widely accepted notion of weaker global growth outlooks, and a declining housing market, and deterioration of consumer and business sentiments. He added that the very dry summer the country has just experienced put strain on production. These factors all lead to the concern of short-term inflation. Much like the ECB, the RBNZ is concerned about price and cost pressures. On the bright side, Bollard noted a strong labor market, and high commodity prices that helped export growth. Therefore, the bank decided to hold the Overnight Cash Rate (OCR) at 8.25%. He concluded: "...We see significant downside risk to future activity but upside risks to inflation. A further risk to the outlook is the persistently strong New Zealand dollar which, while helping moderate headline CPI inflation, remains a drag on export growth. |
|||||
Go to US Interest Rate Fundamental Indicator Page
| Central Bank Watch - Bank Officials' Comments | Back to top» |
| Economic and Financial Profile | Back to top» |
Strong Growth and Higher Rates Lead to Carry Trade:
After the financial crisis in 1997-8, the New Zealand economy began to see stronger growth rates in 2001 on. The low value of the New Zealand Dollar helped make exports more competitive abroad. Unemployment fell from 7.8% in 1999 to 3.4% in late 2005. As inflation picked up the bank embarked on a campaign of higher interest rates.
In 2006 and 2007, the New Zealand Dollar has appreciated, increasing flows of foreign capital as the country's interest rate (8.25%) grew against the Japanese rate (0.5%). In the summer of 2007, however, the forex markets saw volatile selling as the "credit crunch" seized global markets and many investors and traders unwound those carry trade positions.
