Kiwi exporters weathering the sub-prime storm
Auckland, 10 June 2008 - A survey of 244 New Zealand businesses by DHL, the world's leading express and logistics
company, has found the majority of exporters are weathering the economic storm caused by the US sub-prime mortgage
crisis and some are even optimistic about future orders.
Of companies surveyed who export to the US, 58 per cent have reported no impact to their current export orders. Only 22
per cent experienced a decrease and 5 per cent stated an increase in export orders.
Looking forward, 77 per cent of exporters are anticipating no change or an increase in orders to the US market over the
next six months.
"Given the impact the US sub-prime crisis has caused to markets worldwide and the New Zealand public's concerns about
potential local effects, it is positive that most exporters are reporting they are unaffected by the crisis and even
optimistic about orders in the near future," says Derek Anderson, General Manager, DHL Express, New Zealand.
New Zealand exporters surveyed reported that other export markets are also unaffected by the crisis. Over the next six
months 80 per cent of exporters expect orders to markets other than the US, to remain stable through the crisis.
Jason Wong, Director, Economics and Strategy, First New Zealand Capital says, "While global economic growth is clearly
slowing, this is from a very strong run-rate so exporters can still achieve growth".
"When weighted by exports, NZ trading partner GDP growth is much stronger than during the Asian crisis of 1998 or the
tech-crash of 2001, which puts the impact of the sub-prime crisis into perspective. Australia and Asian economies are
still growing strongly and recent data have showed upside surprise to Europe and Japan economic growth relative to
expectations".
The fluctuating New Zealand dollar against the US has been benefiting exporters with over 50 per cent of businesses
reporting cost savings. Of these companies, 66 per cent will reinvest these cost savings with 26 per cent using the
savings to cover increased operating costs such as fuel.
"The survey results on cost savings are a friendly reminder that there are two sides to the currency debate," says Mr.
Wong. "Exporters benefit from a strong currency to the extent that it keeps imported costs low but clearly revenue is
affected on the negative side. A weaker currency would boost export revenue, but any gains would be reduced by higher
costs."
Mr. Anderson says, "With recent speculation about a potential recession in New Zealand, public debate about increased
food and petrol costs and a tight labour market, it is encouraging for the economy that exporters are feeling
optimistic."
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