Welcome to the last 2011 issue of the BNZ Weekly Overview.
Merry Christmas everyone and Happy New Year. It would be great to be able to say that the year ends well for ourselves
and the world economy and that we can look forward to good economic conditions over 2012 with our growth driven by
higher business investment and exports, unemployment falling away, and commodity prices holding firm. But some recent
data releases in New Zealand have been weak – retailing, manufacturing and construction. And more importantly, the
situation in Europe is getting worse and spreading around the globe.
The European leaders summit resulted in only two things. First was an agreement to at sometime in the future do what all
Euro-zone members promised to do when they joined the Euro – keep deficits and debt down. Second was the split between
the UK and the other 26 EU members which has created a whole new layer of uncertainty. Plus the ECB and the Germans have
made it clear that in no way either direct or indirect will the ECB finance bulk purchases of government bonds.
Meanwhile in eastern Europe and Asia credit conditions are tightening as European banks pull back to their home
operations and work out how to raise over €115bn extra capital in the coming year.
There is only one recommendation we feel 100% certain needs to be made for business managers contemplating their 2012
operations. Position yourself to respond quickly if things turn to custard and the Euro breaks apart.
Assuming that does not happen then a lot of 2012 for us in NZ will be about waiting for farmers to spend more of their
high incomes, and waiting for insurance to become available so the rebuilding of Christchurch can kick into high gear.
Happy holidays.
This week at www.tonyalexander.co.nz we discuss the results of our monthly real estate survey.
ends