Magazine article New Zealand Management

High Expectations

Magazine article New Zealand Management

High Expectations

Article excerpt

The knack of divining economic and cultural signals gives exporters a healthy head start. So it's little surprise that record numbers of exporters turned out for a New Zealand New Thinking export breakfast in Auckland recently. They fronted up to hear the BNZ's chief economist Tony Alexander and Michael Chilton, director of the Auckland office of Ministry of Foreign Affairs and Trade (MFAT).

Anyone expecting news of relief from the high Kiwi dollar would have been disappointed. Alexander is sticking to his guns that exporters will be fighting a strong dollar--albeit with some blips along the way--for the next couple of years. "Don't expect to see a slowdown," he warned, "until the housing market and retail spending cool off."

Like it or not, Alexander argues our dollar sits in its rightful place relative to prices for international commodities such as logs. He continues to plug his message that a raft of insulating factors will cushion the New Zealand economy for some time to come. These, he says, include low fixed interest rates, a backlog of construction spending and high job security. In the past eight years, for example, an extra 348,000 jobs have slashed unemployment from six percent to 3.7 percent.

The tightening labour market means employers must change the way they approach new business. "Companies can no longer get the orders and then find the people to fulfil them," says Alexander. "Now we need to flick it round: get the people and systems in place first."

Nor can employers afford any longer to lay off staff during quiet moments with a view to picking them up when the workload cranks up again.

Alexander advised exporters to seek natural hedging, keep focusing on ways to boost productivity and get used to the idea of a strong dollar.

"The exchange rate is expected to face mild downward pressure possibly late in the year as New Zealand's growth underperforms growth overseas and with the current account deficit remaining at high levels," he noted. "But exporters should be wary about getting optimistic over a strong fall in the Kiwi dollar."

Reading the signals and getting used to new stuff was also high on the agenda for MFAT's Michael Chilton whose diplomatic career encompasses stints in Washington DC, Bangkok, London, Singapore, Kuala Lumpur and Hanoi. …

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