Monday, August 04, 2008

NZ economy slips deeper into recession

What a difference can be in a week. Last week mark the tell tale sign of New Zealand economy slips deeper into recession. Well, truth is the recession is gathering momentum for the past year. Since financial crisis in finance sector of the economy, over 20 finance companies have closed door due to run in deposit. One by one they fall like dominoes. When property companies and house buyers face trouble, their lenders would also face trouble. This has been going on for the past year. Now it get worse.
Last week mark a new day. A property investment fund, AMP Capital New Zealand freezes money because of a run on investment. ie more people withdrawing than people join and invest.


Then New Zealand dollar, the kiwidollar as they fondly call it in forex market fall vis-a-vis USD from 75cent to 72cent.

The Reserve Bank Governor has lowerwed the benchmark interest rate by 25 basis point last week. That contribute to lower kiwidollar as the difference with other currencies interest rate is less, make it less attractive.

Over the weekend, the opposition leader fight back.

Yesterday, Opposition leader John Key announced a raft of tax cut and Govt infrastructure spending to the tune of NZ$5billion to kickstart the economy should National Party get elected. Very Keynesian.
About time and probably that just what we need to kickstart the economy. Job losses is predicted to hit 45000 by next quarter, and unemployment is predicted to hit 5%.

Meanwhile, it has been raining cats and dogs here for the past week.

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