Costs start to bite as economy under pressure

National's Finance spokesman, Don Brash, is predicting a tougher time ahead for the country's economy as the tide starts to turn in the rural sector.

"Sector leaders are predicting a sharp downturn in the rural economy as dairy farmers reel from Fonterra's payout news which will see incomes cut this year by an average $127,000, and the drought begins to bite.

"The whole business sector has been willing to accept the increased costs this Government has lumbered on them in recent years because times have been good. New Zealand has enjoyed the benefits of high commodity prices, low interest rates and, until recently, a weak exchange rate.

"But this is fast changing and farmers are the first to see through the Government's rhetoric. They know Labour will do nothing to help the rural sector as lower commodity prices and the exchange rate put farmers under pressure.

"There will be tough times ahead because a depressed agriculture sector will severely dampen the New Zealand economy, starting with the provincial centres.

"The Government is about to face its first major economic test and I have no doubt it will fail," says Dr Brash.

© Scoop Media