Solid, sustainable growth as economy adjusts

Non-dairy export industries can expect a significant boost in returns in the wake of the fall in the value of the New Zealand dollar over the past year, Finance Minister Bill English says.

“New Zealand has notched up eleven consecutive quarters of employment growth, with 69,000 more jobs created in the past year of which over 24,500 were in manufacturing,” Mr English said at the New Zealand Manufacturers and Exporters Association conference in Christchurch.

“What we are witnessing is an adjustment occurring in the engine-room of the economy. Resources and investment will move into industries that are experiencing a progressive improvement in their international competitiveness. These industries will provide new jobs and opportunities for New Zealanders,” Mr English said.

Over recent years, the country’s goods and services export industries have had to become much more efficient to continue operating. The 25 per cent downward correction in the NZD/USD over the past year will translate into a significant strengthening in the competitiveness of all exporters over time.

The Treasury’s most recent public assessment of the economy is that it is expanding at its long-term trend rate of 2.5 to 3.0 per cent a year.

Economists expect the pace of annual growth to ease to 2.0 to 2.5 per cent, a still solid rate as the economy adjusts and adapts to the recent decline in dairy income.

“It is the kind of solid, sustainable growth that will deliver more jobs and rising incomes, while permitting business and mortgage borrowing costs to remain down at around current, historically low rates,” Mr English said.