Hon Bill English
Minister of Finance

Export sector leading NZ's economic recovery

New Zealand's economic recovery is being led by the export side of the economy which has experienced a significant turnaround from the low point of the recession, Finance Minister Bill English says.

“The recovery will be patchy at times. We are seeing this reflected in stable rather than growing results for domestic industries like housing and retail, and indicators such as business confidence and the share market," Mr English said in a speech to the Farmers Mutual Group Farming Leaders Forum today.

"However the outlook for the tradeables sector – exports and import competing industries – is strong. This is particularly so for primary industries which have increased their output and enjoyed good price rises since the middle of last year.

"Higher export prices drove a 5.9 per cent jump in the terms of trade in the March 2010 quarter. This is the largest quarterly rise since 1976.

"In addition, the seasonally adjusted trade balance for the June 2010 quarter was a surplus of $389 million. This follows a seasonally adjusted surplus in the March quarter - the first since December 2001.

"While commodity prices slipped back slightly in June and July – as measured by the ANZ World Commodity Price Index – prices remain 47 per cent higher than a year ago and near the record highs they hit March this year.

"So while parts of the domestic side of the economy have been fairly flat – due to the uncertain global environment and the need for businesses and households to pay down large stocks of debt – our tradeables sector is leading New Zealand's recovery.

"This is starting the process of rebalancing our economy towards exports and growth and away from unsustainable borrowing, government spending and consumption.

"However, turning around the imbalances that built up over the past decade will require a relentless, long-term focus and commitment. The only way we can permanently lift New Zealand’s economic growth is through considered and consistent reform and change, year after year.

“Budget 2010 took several steps in that direction – including across the board personal tax cuts from 1 October, which will encourage hard-working New Zealanders to earn and save more.

"“In the past 18 months, we have been extremely busy rolling out policies. In recent days we have tasked the Savings Working Group with the job of taking a close look at how to improve New Zealand's national savings record and we will announce more policies in coming months," Mr English says.

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