Academic journal article The Reserve Bank of New Zealand Bulletin

NZ Is Not Australia, but Could Be Their Lucky Neighbour

Academic journal article The Reserve Bank of New Zealand Bulletin

NZ Is Not Australia, but Could Be Their Lucky Neighbour

Article excerpt

5 November 2009

Financial markets and businesses need to appreciate the different futures New Zealand and Australia are charting out of the global financial crisis, Reserve Bank Governor Alan Bollard said today.

Speaking to Trans-Tasman Business Circle in Auckland, Dr Bollard said both countries have survived the crisis well, due to a mix of strong institutions and stimulative policies.

"However, their immediate prospects are different. Australia has avoided negative growth, and its prospects are driven by strong terms of trade, vast mineral deposits, the Chinese market, and rapid population growth.

"New Zealand has had a recession, and the pick-up is slower and more vulnerable--a difference financial markets do not appear to appreciate.

"This is particularly evident in the relatively stable cross-rate on foreign exchange markets. If financial markets can't see the differences, they will eventually lose money, and it will hurt the New Zealand economy."

Dr Bollard said New Zealand could improve its prospects by taking advantage of Australia's very strong future growth potential. …

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