New Zealand’s Economic Outlook Reserve Bank of New Zealand February 2009
Off the record please…
1.International financial crisis Huge financial losses Credit expensive and scarce Big asset price falls
The financial crisis so far
Large credit losses
Large housing market corrections
2.International economic slowdown Slower trading partner growth Falling commodity prices Lower exchange rate
Much weaker world growth
Commodity prices falling - oil
Export commodity prices falling
Lower exchange rate providing buffer
3.Effects on the NZ economy Pressure on businesses Pressure on household sector The economy adjusts
Lower investment intentions…
…and lower employment intentions
House prices to fall further…
…and household spending to remain subdued
Means a slowing economy
… and should provide significant inflation relief
Prompting significant OCR reductions
Focus on financial stability Providing liquidity Government Guarantee Schemes Other actions
End of presentation