Media Release
September 29th, 2000
GDP fall no surprise
The decline of 0.7 per cent in New Zealand's GDP for the June quarter came as no surprise; we predicted it six months
ago, the Employers & Manufacturers Association (Northern) says.
"Back on March 30th we said the growth then could not be sustained at a time when the banks and Government were
congratulating themselves on what has proved to be a short term growth spurt based on domestic consumption," said
Alasdair Thompson, EMA's chief executive.
"We repeated warnings about the risk of recession on May 15th and May 17th, both before and after the Reserve Bank
raised interest rates by 0.25%.
"At the time all the bank economists were predicting our exchange rate would go up. We said it was overvalued and would
go down.
"The economy will at best remain flat or decline further this quarter ending September. Officially that means we are in
a recession.
"The relatively low dollar should have been beneficial for exporters much more than it has been over the past year,
especially since world commodity prices such as for dairy products have been very strong.
"The signs of our business success have been incredibly muted.
"Now, with our currency buying less from overseas, and everyone facing increased costs, the answer does not lie in
awarding ourselves higher salaries, wages and dividends. That would just drive interest rates up, and increase
unemployment.
"Of course we have to save more, but more important is we have to invest more wisely. Mediocre investment performance is
no longer tolerated - New Zealanders are diversifying their investments offshore though it is badly needed for new
projects at home
"Growth won't happen without the development a vision of ourselves that clearly defines what we want, then sets out the
policies and plans for how we are going to get to achieve it.
"Most of all we need leadership that endows confidence, and attracts investment into education and wealth creation
business.
The PM's meeting with 70 business leaders on October 24th is a start. It is to be commended. We hope the secrecy
surrounding the event will not extend to the outcome from it."
Further comments: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme) 025 982 024