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New Zealand fifth safest on Asia-Pacific risk indicator - Australia most stable place to do business

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New Zealand is ranked as the fifth safest country in which to do business in the Asia-Pacific region, behind Australia, Hong Kong, Japan and Singapore.

The ranking comes from Dun & Bradstreet’s (D&B) Global Risk Indicator, which assesses the risk of doing business in 131 countries around the world. The highest possible rating is allocated to countries that display the lowest degree of uncertainty associated with expected returns such as export payments, and foreign debt and equity servicing.

New Zealand’s rating on the Global Risk Indicator (GRI) places it at number
twenty five globally, while Australia is ranked at number 3. The risk ratings of
both countries remain unchanged since the September quarter, with New
Zealand a DB2b and Australia a DB1c.

The unchanged rating reflects the risk outlook for New Zealand – which despite
some changes to its political, macroeconomic, and external risk environment –
remains stable.

According to John Scott, General Manager of D&B New Zealand, the country’s
challenging, yet stable economic climate is reflected in its consistent risk rating.
“New Zealand’s risk outlook is relatively positive despite some challenging
conditions,” said Mr Scott.

“There are factors that are putting some pressure on New Zealand businesses
and the economy, including the credit crunch, interest rates and inflationary
pressure.

“Strong economic management is important to ensure that our risk does not
escalate and that businesses do not have to face additional challenges in the
New Year.”

According to the latest D&B Regional Risk Outlook Report, inflationary
pressure is expected to continue in the months ahead, while interest rates are
forecast to remain steady in the short-term following four increases earlier this
year.

Retail spending looks to be losing momentum; real retail sales contracted by
0.7% quarter-on-quarter in Q2 and grew by just 0.2% in Q3.

New Zealand’s financial system has shown resilience during the continuing
global financial market volatility, with the Reserve Bank helping to ensure that
banks have access to liquidity in recent months.

Fiscal policy looks set to remain tight, particularly as the Federal Election
approaches as the potential use of fiscal surplus to generate tax cuts in the
2008/09 budget will likely add to inflationary pressure.

The report also forecasts that real GDP growth will reach 2.5% in 2008, while CPI inflation is expected to reach 2.7%. Unemployment is forecast to hit 4.0% in 2008, following
a fall to 3.5% – the lowest level since records began in 1986 – in the September quarter.

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