BNZ Weekly Overview
Welcome the May 17 edition of the BNZ Weekly Overview
Apart from Germany surprising with 0.5% growth during the March quarter there is very little positive news coming out of
Europe and it seems just a matter of time and another general election in a few weeks before the Greeks leave the Euro
and go back to the drachma. There are no rules for doing this and deepening concerns about the impact on holders of
Euro-denominated debt in Greece, questions about whether other indebted countries may follow, and uncertainty about how
much tolerance the Germans have to easing off fiscal austerity mean investors are increasingly voting with their feet
and leaving the Euro. This is supporting the Pound, Yen and greenback, but adding to weakness in the NZ and Australian
currencies which tend always to fall when bouts of the heeby geebies grip world markets.
There is also some downward pressure on our currency from another 6.4% fall in dairy prices, weak retailing and job
advertising data, and downward revisions to last year’s GDP growth showing the annual gain was only 1.1% (in spite of
the Rugby World Cup) and not the 1.4% first reported. Growth over 2010 was stronger at 1.5%!
Data for China this past week have come in weaker than expected, but there is at least one outstandingly piece of good
news for New Zealand – no further Queensland fruit flies have been found.
Next Tuesday the May issue of Growing With China will be released. If you wish to be placed on the emailing list to
receive it please email me at Tony.alexander@bnz.co.nz asking for it.
ends