27 June 2008.
Account deficit illustrates exporters pain
The New Zealand Manufacturers and Exporters Association (NZMEA) says the current account deficit of $2.16 billion for
the March quarter demonstrates the damage monetary policy has done to New Zealand’s tradeable sector.
Statistics New Zealand has released March quarter figures showing that the deficit is worse than expected. This news has
prompted a drop in the dollar continuing the downward trend following this months RBNZ comment, foreshadowing some
improvement for exporters.
Interest rates supported a net capital inflow of $2 billion, holding up the dollar in the March quarter. The trade
deficit increased $1.08 billion from the same time last year, showing the continued affect of that capital inflow and
the resulting higher dollar for longer on our exporters.
NZMEA Chief Executive John Walley says, “The numbers demonstrate the adverse impact this long cycle has had on the
tradeable sector. Currently the exchange rate is improving for exporters but it is too late to claw back the likes of
Fisher and Paykel who are already on their way offshore. Why hang on to policies that exacerbate long run cyclic changes
in the value of the New Zealand dollar make life unnecessarily difficult for exporters?”
“In the face of this volatility, few will take the risk to build export businesses inflating the trade balance deficit
which is ultimately unsustainable.”
“For the exporters the use of the OCR resist inflation has been problematic. Unless we implement new ways to deal with
our domestic inflation problem, history will continue to repeat itself, and each time round we will end up with even
fewer exporters,” says Mr. Walley.
NZMEA – the independent voice for manufacturers and exporters.
ENDS